A bit of reality to temper upbeat energy forecasts
The Big Oil crowd is pumping up a recent prediction that the United States will be the world’s largest petroleum producer by 2020.
That estimate from the International Energy Agency has received plenty of media attention, along with the organization’s further claim that America could be nearly self-sufficient in energy by 2035.
Gee, that’s only 23 years from now. What could possibly go wrong with that forecast?
Lots of things, of course. We are, after all, talking about extremely volatile national and world energy markets. Just how unpredictable can they be? Take a look.
In the 1980s Conoco’s stable of experts offered an annual booklet called “World energy outlook through 2000.” Here were a few key points from the oil giant in 1985 — plus an update on how things really turned out.
- Oil prices would rise from around $28 a barrel to between $40 to $70 a barrel by 2000.
In reality, petroleum prices fell below $15 a barrel in 1986, bounced around the low $20 range for many more years, then finally rose to $28 by 2000. One factor for the stability was the decision by the Organization of Petroleum Exporting Countries to flood the world with oil during part of the 1990s.
- Coal usage would grow to supply 58 percent of the nation’s electricity needs by 2000, while dependence on natural gas would fall to 7 percent.
In reality, coal’s portion of the electricity market dipped to 52 percent by 2000, while natural gas use boomed to 16 percent. The experts partly missed the fact that utilities would use more low-cost natural gas to avoid building more coal-burning power plants.
Conoco, of course, was hardly alone in not knowing how oil-producing and petroleum-consuming countries would act during years of peace and war from 1985 to 2000.
Against that backdrop, Americans should take the recent predictions by the International Energy Agency with a grain of salt.
Consider the calculation that U.S. oil production will escalate at its present pace and boost production into the No. 1 global position by 2020. Will Saudi Arabia and Russia, now ahead of us, choose for some reasons to rapidly increase their output as well? Will environmental problems trump the expansion plans of U.S. oil companies? Will worldwide crude prices collapse for any number of reasons, making it less profitable to pump more out of the ground?
The prediction that the United States could become nearly energy independent — something every president since Richard Nixon has talked about — comes with questions, too. Will renewable energy production continue to rise dramatically? Will efforts to more efficiently use electricity and gasoline be as successful as planned?
Decisions in the coming months will affect these and other energy issues.
Topping the list is the fate of the valuable wind energy tax credit. If the plug is pulled on Dec. 31, thousands of jobs soon will be lost in this key industry. Kansas Gov. Sam Brownback has been outspoken in his strong support for extending the credit.
Another chronic problem is that the United States does not have a national strategy that can “push the country toward more rational ways of providing energy to Americans.” Actually, those words are from a 1991 Kansas City Star editorial, though they still apply today.
It seems a few things never change, even in the unstable world of energy.
Marcie Cottrell
6 months agoYou just can’t stand the fact that we are reducing our dependence on foreign oil. Your still a disciple of the fraud and long disproved farce that is the “Peak Oil Theory”. Why does the thought of an energy independent America scare the Left so much? Just think if we had approved the Keystone Pipeline last year and construction was well under way. Oh thats right, it is well under way. Underway to the west towards BC and on to China. Why doesn’t the Left and the Watermelon people just get out of our way and let us develop our own resources?
Mark Hastert
6 months ago“let us develop our own resources”
First let’s compare apples to apples. The Keystone pipeline is about exporting oil out of the country. It won’t do anything to make us energy independent, quite the contrary. If we truly want to be energy independent now and into the future then maybe we should have a discussion about keeping our resources for our own use instead of selling them to India, China. etc., at least all that are on Federal land and therefore owned by the people of the US.
….and ah Marcie, Just who are the Watermelon people? I’m not following you.
Marcie Cottrell
6 months agoWatermelon People: Those who are green on the outside and red on the inside and I don’t mean red as in red state/blue state. As for what the Canadian Sands crude is going to be used for, you have been reading the Daily Kos and Huffy Post too much. As someone who has been in the refining business for over 35 years I can tell you that the US Gulf Coast and mid continent refineries have spent hundreds of millions of dollars in the past few years getting geared up to run that crude. Secondly, the rest of the world outside of North America runs on what is called a diesel economy. In other words, most all of their transportation is diesel powered. So yes, some excess diesel may end up being exported but since diesel is priced as a world commodity, more supply will help to bring the US price down. Of course you will ignore what I have said and reply with something stupid like, its all about greedy oil companies raping and pillaging the earth while ripping us off so I don’t even know why I waste my time.
Mark Hastert
6 months ago“I can tell you that the US Gulf Coast and mid continent refineries have spent hundreds of millions of dollars in the past few years getting geared up to run that crude”
Yes indeed and their warm water ports for export. Valero, the top beneficiary of the Keystone XL pipeline, has recently detailed an export strategy to its investors. The nation’s top refiner has locked in at least 20 percent of the pipeline’s capacity, and, because its refinery in Port Arthur is within a Foreign Trade Zone, the company will accomplish its export strategy tax free.
We are already exporting refinery products and the decreased domestic supply does cost US consumers. The Canadian oil is not enough to affect world prices and it certainly won’t benefit the US consumer. I don’t care about oil companies. The Canadian tar sands oil isn’t ours and it’ not intended for us. If they build the pipeline for their own profit then it needs to be safely away from the resources we do own and need. Our cities, our towns & our water supply.
I care about our own energy security. The fantasy being promulgated by the API,and proponents like yourself that it will somehow benefit US consumers is absolute nonsense. Aside from a few initial construction jobs and ongoing maintenance & refinery jobs there is little in it for us. If we truly want energy security then we need to establish our own security first by declaring all energy resources on federal lands our strategic reserve and off limits to all but US future consumption. Then we need to take steps to develop clean coal technologies, improved efficiency, and alternate resources so that our oil & gas lasts as long as possible. Let China, India and the rest of the world compete for the scraps.
Build your pipeline but be responsible and honest about it. And please spare us the poor put upon oil company sanctimony. Exxon? BP? Criminal admissions? No, they’re not always bad but sometimes they are very very bad and they are most always very very profitable.