Ship of Fools: US energy independence

Thread: US energy independence Board: Oblivion / Ship of Fools.

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Posted by Zach82 (# 3208) on :

Newsweeklies have started talking about the possibility that the United States will become "energy independent" within the next decade. Increased production using new technologies, like "frakking," along with decreased demand due to new efficiency standards and investments in renewable energy will mean the US will not only not have to import oil anymore, but might even become an exporter.

I suppose my first question is whether this seems very likely to happen. I haven't seen anyone saying otherwise, but that's the media for you. But if it does happen, the predictions for what it will mean range from a new American economic golden age to a complete collapse of the world geo-political balance.

I don't suppose there are many experts on geo-politics, economics, or oil production on the ship, but surely all of us have opinions. [Biased]

Posted by Beeswax Altar (# 11644) on :

I doubt it's possible. I wish it was. Energy independence would be the best thing to ever happen to the United States. Jobs in energy production pay very well. Plus, imagine not having to worry about politics in the Middle East.

Posted by Porridge (# 15405) on :

quote:
Originally posted by Beeswax Altar:
Plus, imagine not having to worry about politics in the Middle East.

Errrrr.

Given the presence of extremely high dudgeon of assorted flavors in combo with nuclear capabilities (not to mention assorted alliances, some not all that well-thought-out) I can't imagine the U.S. EVER "not having to worry about politics in the Middle East."

Posted by Beeswax Altar (# 11644) on :

We have alliances because of the oil. We worry about nuclear weapons because of our alliances and involvement in the Middle East. Take away our need for Middle East oil and we don't the alliances or to intervene in Middle East politics.

Posted by Curiosity killed ... (# 11770) on :

It was suggested in something I heard recently in the UK - where the headline is that the USA will become an oil exporter and the biggest oil producer in the world by 2020. It's from an International Energy Agency report released on 12th November 2012.

Posted by Zach82 (# 3208) on :

One of the issues I have read about is that the US might very well decide Middle-East security isn't its problem anymore, but that will leave the question of whose problem it will be. China is the obvious candidate, since it needs a lot of oil but doesn't have domestic supplies to fall back on, which may or may not make anyone feel better.

Posted by Sioni Sais (# 5713) on :

quote:
Originally posted by Beeswax Altar:
We have alliances because of the oil. We worry about nuclear weapons because of our alliances and involvement in the Middle East. Take away our need for Middle East oil and we don't the alliances or to intervene in Middle East politics.

Take away Middle East oil and there's still Israel.

Posted by Beeswax Altar (# 11644) on :

True

Hard to say how energy independence would affect how the United States deals with Israel.

Posted by Hairy Biker (# 12086) on :

quote:
Originally posted by Beeswax Altar:
We have alliances because of the oil. We worry about nuclear weapons because of our alliances and involvement in the Middle East. Take away our need for Middle East oil and we don't the alliances or to intervene in Middle East politics.

And then where will American arms companies sell their weapons?

Posted by Beeswax Altar (# 11644) on :

Same places they sell them now.

Posted by Sioni Sais (# 5713) on :

quote:
Originally posted by Beeswax Altar:
Same places they sell them now.

Right at the moment they are selling them in huge quantities to Saudi Arabia, Oman and the UAE. If those countries don't sell their oil how are they going to afford those fancy warplanes and missile systems?

[ 23. November 2012, 20:34: Message edited by: Sioni Sais ]

Posted by Porridge (# 15405) on :

They'll sell their oil to China.

Posted by Crœsos (# 238) on :

quote:
Originally posted by Zach82:
Newsweeklies have started talking about the possibility that the United States will become "energy independent" within the next decade.

It should be noted that what's usually described is (to borrow a favorite phrase of the Romney campaign) "North American energy independence". This is often translated as "U.S. energy independence" by Americans who often forget that there are other countries in North America. Looking at the specifics of the policies involved indicates that "North American energy independence" will achieved by the U.S. importing a metric shitload of tar-sand-derived oil from Canada.

As far as Middle East policy goes, the fungibility of petroleum means that even if the U.S. doesn't directly import oil from the Middle East, it will still be subject to price fluctuations due to production goals set by the major producers (a.k.a. OPEC). This means the U.S. will still be quite interested in the political situation in oil-producing countries.

Posted by Honest Ron Bacardi (# 38) on :

Croesos writes:

quote:
Looking at the specifics of the policies involved indicates that "North American energy independence" will achieved by the U.S. importing a metric shitload of tar-sand-derived oil from Canada.

Or maybe not. Too late perhaps?

Posted by Amanda B. Reckondwythe (# 5521) on :

Can't read the linked article without subscribing or logging in.

Posted by Honest Ron Bacardi (# 38) on :

Ah right, sorry. Try this link, then click on the first item cited.

Posted by Zach82 (# 3208) on :

I've seen several reports that speak of specifically US energy independence, though a couple do place it in the context of an oil production boom in the entire western hemisphere.

[ 23. November 2012, 22:22: Message edited by: Zach82 ]

Posted by Zach82 (# 3208) on :

I was going to look up my sources, but it turns out that while headlines speak of US energy independence, articles talk about North American energy independence. [Hot and Hormonal]

Posted by Crœsos (# 238) on :

quote:
Originally posted by Honest Ron Bacardi:
Croesos writes:
quote:
Looking at the specifics of the policies involved indicates that "North American energy independence" will achieved by the U.S. importing a metric shitload of tar-sand-derived oil from Canada.
Or maybe not. Too late perhaps?

Depends on how you define "energy independence". Brazil has become "energy independent" by some measures, but this doesn't mean they're not importing oil. In Brazil's case it means that they're exporting an amount of sugar-cane-derived ethanol equal (in energy content) to the amount of petroleum imported into the country. Using this measure, one can easily foresee a situation where "North American energy independence" is achieved by Canada exporting to China an amount of tar-sand-derived oil equal to the amount of Middle Eastern petroleum imported by the United States. Such a situation would, obviously, do approximately diddly-squat to alter the dynamics of American policy in the Middle East.

So I guess if we're discussing "energy independence" we'd first have to determine the specific shape of that independence and how it's achieved.

Posted by Zach82 (# 3208) on :

Imports from the Middle East comprise only 14% of US consumption these days. It seems one of the reasons the economic sanctions against Iran have been more successful than usual is because the US can now make up the difference of oil production.

Posted by Crœsos (# 238) on :

quote:
Originally posted by Zach82:
Imports from the Middle East comprise only 14% of US consumption these days. It seems one of the reasons the economic sanctions against Iran have been more successful than usual is because the US can now make up the difference of oil production.

Sorry for the imprecision. Simply substitute in "petroleum imported from outside North America" for "Middle Eastern petroleum imported" in my previous post and you'll get the meaning I was going for.

Posted by Ruudy (# 3939) on :

I think we will be energy independent quite soon.

Bakken Shale and Eagle Ford are so ridiculously huge we can hardly fathom them.

I read a report by the lead commodities analyst at Citigroup stating that the US will be the new middle east in 10 years.

I spent some time in North Dakota working with folks trying to meet the tremendous housing need out there. It is insane the amounts of growth going on. It is the wild west all over again. What are desperately needed are churches and ministers and missionaries, etc.

The abundance of energy could lead to a re-industrialization of the US.

I hope these developments would mean that the US would start to mind its own business globally.

Posted by Zach82 (# 3208) on :

Britain had its energy bonanza about 30 years ago with the development of North Sea reserves, didn't it?

Posted by Ruudy (# 3939) on :

True. Let me see if I can find some figures on the relative size of peak reserve estimates in the North Sea vs Bakken and Eagle Ford to show the scale. Also note that it is much simpler to extract onshore oil than offshore.

By energy independent, we are talking about the US becoming a net exporter of oil. We are looking at US domestic supply and Canadian imports reach over 20 mm barrels per day (gas or oil in oil equivalent) in 2020 from around 11.4 mm bpd today - while US demand could fall to under 17 mm bpd. Eventually even the US ban on crude exports should be lifted but only after a couple years of crude oversupply.

Fracking is here to stay (at least in the less densely populated areas) as the technology claims to get cleaner and cleaner and safer and safer. No politician wants to kill the goose laying the golden egg - locally or nationally.

Posted by Crœsos (# 238) on :

quote:
Originally posted by Ruudy:
Fracking is here to stay (at least in the less densely populated areas) as the technology claims to get cleaner and cleaner and safer and safer. No politician wants to kill the goose laying the golden egg - locally or nationally.

Fracking is a technology and doesn't "claim" anything. The people trying to sell it, on the other hand . . . A useful counterpoint to these claims of clean safety and safe cleanness is this photo, supplied by those anti-capitalist pinkos at the Wall Street Journal.

Posted by Sioni Sais (# 5713) on :

quote:
Originally posted by Zach82:
Britain had its energy bonanza about 30 years ago with the development of North Sea reserves, didn't it?

YUP, and the North Sea oil & gas profits paid for a lot of the 1980's tax cuts. The revenues have fallen and the Treasury hasn't had the bottle to fill the gap with direct taxes, so indirect ones have been increased instead (whole 'nother topic).

Posted by Zach82 (# 3208) on :

Well, taxes are already as low as they can get in the United States. I suppose our energy bonanza can go directly to oil executives in a much more efficient manner.

Posted by Martin PC not & Ship's Biohazard (# 368) on :

The UK has 300 years of coal reserves. Get frakking! God help us. When oil drops below $40 a barrel Saudi melts down. That was 20 years ago. The Chinese will pay for oil with arms CHEAPER than US ones.

Posted by Gramps49 (# 16378) on :

Yes, Chinese arms may be cheaper, but they certainly are not better!

Actually, this thread is talking about production, but a significant step towards energy independence for the US will be conservation. By 2025 the average car will have to get around 54 miles per gallon (or about 23 km per liter).

I was listening to a program yesterday that pointed out we could possibly increase our energy efficiency by over 66% without much of a change in our lifestyle.

Think what this could mean with our carbon footprint.

Posted by Palimpsest (# 16772) on :

quote:
Originally posted by Crœsos:

quote:
Originally posted by Ruudy:
Fracking is here to stay (at least in the less densely populated areas) as the technology claims to get cleaner and cleaner and safer and safer. No politician wants to kill the goose laying the golden egg - locally or nationally.
Fracking is a technology and doesn't "claim" anything. The people trying to sell it, on the other hand . . . A useful counterpoint to these claims of clean safety and safe cleanness is this photo, supplied by those anti-capitalist pinkos at the Wall Street Journal.

Thanks to Vice President Cheney, the people doing frakking don't have to disclose or regulate what chemicals they are putting into the ground. It is step one in the tradition of letting extractive companies make a fortune and then leave a mess to be paid for by the taxpayer.

Posted by Zach82 (# 3208) on :

quote:
Originally posted by Gramps49:
Yes, Chinese arms may be cheaper, but they certainly are not better!

Actually, this thread is talking about production, but a significant step towards energy independence for the US will be conservation. By 2025 the average car will have to get around 54 miles per gallon (or about 23 km per liter).

I was listening to a program yesterday that pointed out we could possibly increase our energy efficiency by over 66% without much of a change in our lifestyle.

Think what this could mean with our carbon footprint.

This energy independence is predicated on the US meeting these efficiency goals.

Posted by Gramps49 (# 16378) on :

As the United States has reduced its dependence on Middle Eastern oil, China has become increasingly reliant on it. Up till now China has been willing to let the United States Navy keep the sea lanes open, but look for more of a Chinese naval presence in the area. I think it was a year ago the Chinese Navy made a call at the Seychelles. The Chinese have also purchased several retired aircraft carriers and are conducting landings on the deck of the Liaoning. In other words, they are making moves to become a blue water navy. I also believe they have participated in the interdiction of Somali pirates off the Horn of Africa.

There will be a shift in the balance of power as the US continues to reduce its need for Middle Eastern Oil. The question is, will we be able to work cooperatively--as we have seen with the Somali pirates--or will we find ourselves in a confrontive relationship? I pray the former over the later.

Posted by fletcher christian (# 13919) on :

Isn't fracking a disaster? National Geographic have just done a piece on it and it was far from glowing. Contaminated ground water, seismic problems, pollution on a mass scale, to name but a few issues. Hardly seems to be the holy grail.

Posted by Doublethink (# 1984) on :

It worries me that it causes earthquakes.

Posted by fletcher christian (# 13919) on :

I don't think it takes a genius to work out that cracking up the earths crust and pumping a load of toxins into it might just have a negative effect on the water table. I know the other issues are hotly disputed though.

Posted by Ruudy (# 3939) on :

quote:
Originally posted by fletcher christian:
National Geographic have just done a piece on it

Is this the one? A bit old. Is there a more recent one?

[ 25. November 2012, 20:21: Message edited by: Ruudy ]

Posted by Mr. Rob (# 5823) on :

quote:
Originally posted by Zach82:

... Increased production using new technologies, like "frakking," along with decreased demand due to new efficiency standards and investments in renewable energy will mean the US will not only not have to import oil anymore, but might even become an exporter.

I suppose my first question is whether this seems very likely to happen ...

It's already happened. The USA already exports a lot of its oil. Oil always goes to where the market price is highest. That's the part missing from this story. It's not pump, pump, pump then build a wall around the USA, where we can be snug and happy with "our" oil. Oil is a free market commodity.

So in a real way it doesn't matter whether the USA is oil independent. There is no value in that fact alone, unless it's part of a military strategy. But for the military, cost has always been no object.

Meanwhile, it's nice for you and me to have cheap domestic oil prices no matter where the oil comes from. But it's not so nice for the producers, especially here in the USA, to have cheap oil by pumping it out of our backyards. Those USA producers make their money, guess where? Trading imports & exports.

*

Posted by no prophet (# 15560) on :

Isn't the USA is essentially bankrupt? The rise in oil prices is one of the factors, complexly interwoven with its oil-based military adventures in the middle east. If its economy is ever to recover, it apparently needs cheap oil, or other energy sources. There is a wealth of info showing that increased energy costs are foundational to recessions. USA cannot afford to continue to spend billions per day on its wars while selling its debt to China.

So in the midst of all this doom and gloom, a spin doctor or seven decide they want to create some good news. That innovation, applied science, American goodness, Jesus and optimism will prevail and create a happier, prosperous time again (can't help snide the cynicism).

They may well do it. It would probably be cheaper and more ethical (in terms of immediate harm to humans) to subsidize multinational energy companies even more than they are already to dangerously extract oil and natural gas from questionable places. It will probably last a generation, and the natural environment will be rather destroyed. But creeping normalcy will take of that.

Myself, I'm not fond of the smell of hydrogen sulphide, dislike acid rain, worry about a warming planet, hate pine beetles, and wonder if anyone has any common sense at all.

[ 26. November 2012, 14:03: Message edited by: no prophet ]

Posted by alienfromzog (# 5327) on :

I'd be interested to know the figures

I would find it very easy to believe that the US can become energy independent in a very short space of time. I very much doubt it will happen though.

This is because, US efficiency standards for cars are decades behind the rest of the world.

If the US got serious about energy efficiency then demand would plummet. Whether this is enough to achieve energy independence with the expanding supply I don't know, but I wouldn't be surprised. I would be surprised if there's the political will to make it happen.

And the UK situation was very well described by Sioni. Although, we are still reasonably independent (90% for oil and 70% for gas IIRC).

AFZ

Posted by Zach82 (# 3208) on :

quote:
Isn't the USA is essentially bankrupt?

No?

Posted by Zach82 (# 3208) on :

quote:
This is because, US efficiency standards for cars are decades behind the rest of the world.

Well, the legislation has been passed.

Posted by Zach82 (# 3208) on :

I was under the impression that the visitations took place over three Christmases. The Ghost of Christmas Present doesn't bugger off until after a children's 12th night party.

Posted by Crœsos (# 238) on :

quote:
Originally posted by no prophet:
Isn't the USA is essentially bankrupt? The rise in oil prices is one of the factors, complexly interwoven with its oil-based military adventures in the middle east. If its economy is ever to recover, . . .

No, the U.S. isn't bankrupt. And you seem to be confusing its fiscal situation (i.e. the government balance sheet) with its financial situation (the general U.S. economy). In the case of the former, I don't think the term "bankrupt" can really apply to an entity which has the power to print its own money and whose debts are denominated in that money.

Posted by Gwai (# 11076) on :

quote:
Originally posted by Zach82:
I was under the impression that the visitations took place over three Christmases. The Ghost of Christmas Present doesn't bugger off until after a children's 12th night party.

I think you meant this for the Dickens thread. Will copy it to over there.

Gwai
Purg Host

Posted by Zach82 (# 3208) on :

Thanks, Gwai.

Posted by no prophet (# 15560) on :

A brief internet search indicates that USA spending is far beyond its means, that somewhere in the vicinity of 75% of its debt is owned in other countries. Internet info about this go back at least 5 or 7 years, and the situation has gotten worse since, so it says. It is hard for a country to have political independence when its finances are controlled within other countries. I think this has a lot to do with the 'energy independence' idea.

There may be definitional questions with bankruptcy that I'm not sophisticated enough to parse. But if you have to borrow to finance the debt you already have, it begins to sound a lot like a consumer going to a bankruptcy trustee and asking for debts to be restructured. Except the country can cheat, and print the money. Sounds like a Ponzi scheme.

Back to energy, I live close enough to the Canadian tar sands that we can track the increase in acidity in bodies of water here. The tar sand contains lots of sulphur. We can also track the incidence of cancers in fish, and in people downstream and particularly to the east, the direction of prevailing winds. I know people say we need oil, but we also need a place to live, and so do the plants and animals. Too bad Jesus only came to save people and not life in general.

Posted by Zach82 (# 3208) on :

quote:
A brief internet search indicates that USA spending is far beyond its means, that somewhere in the vicinity of 75% of its debt is owned in other countries.

Look up reliable sources. The US is not borrowing to pay interest on its loans. The US debt as percentage of GDP is actually quite reasonable compared to other industrialized countries, and most of the debt is owned by Americans.

Posted by no prophet (# 15560) on :

Is this a reliable source? Usagovinfo.about.com? I found this one after prior post. If not, point to one that is please.

And if the foreign ownership of debt is not a large issue, why is it being made into such a large issue?

Posted by Zach82 (# 3208) on :

quote:
Originally posted by no prophet:
Is this a reliable source? Usagovinfo.about.com? I found this one after prior post. If not, point to one that is please.

Read it more closely. It doesn't say what you said it does.

quote:
And if the foreign ownership of debt is not a large issue, why is it being made into such a large issue?

Because republicans.

[ 26. November 2012, 17:05: Message edited by: Zach82 ]

Posted by tclune (# 7959) on :

quote:
Originally posted by Zach82:
The US is not borrowing to pay interest on its loans. The US debt as percentage of GDP is actually quite reasonable compared to other industrialized countries, and most of the debt is owned by Americans.

I've started seeing this kind of argument from the leftish end of the spectrum recently. Frankly, I find it alarming. It is perfectly reasonable to ask whether this is the time to worry about the debt, but the notion that the debt is no longer important is as outrageous now as it was when Dick Cheney asserted it a decade ago. ISTM that Krugman may be jumping the shark with his newest column along these lines. As always, YMMV.

--Tom Clune

Posted by Zach82 (# 3208) on :

Just for a comparison, Germany, that bastion of financial responsibility in the EU debt crisis, has an external debt equaling 184% of its GDP. France is at 254%. The UK has 451%, while Ireland is at a staggering 1,239%.

The United States is at 99%.

Posted by no prophet (# 15560) on :

quote:
Originally posted by Zach82:

quote:
Originally posted by no prophet:
Is this a reliable source? Usagovinfo.about.com? I found this one after prior post. If not, point to one that is please.
Read it more closely. It doesn't say what you said it does.

Of course it doesn't, I found it after the prior post just as I said when I posted it.

quote:
And if the foreign ownership of debt is not a large issue, why is it being made into such a large issue?

quote:
Because republicans.

Can you finish your sentence please. Because republicans --what?

Also, do you mind, if you have the info re the EU countries and US percentages source info, can you post a link or two? Thanks.

[ 26. November 2012, 17:59: Message edited by: no prophet ]

Posted by Crœsos (# 238) on :

quote:
Originally posted by tclune:
I've started seeing this kind of argument from the leftish end of the spectrum recently. Frankly, I find it alarming. It is perfectly reasonable to ask whether this is the time to worry about the debt, . . . ISTM that Krugman may be jumping the shark with his newest column along these lines.

Having read Krugman's column*, which is all about whether "this is the time to worry about the debt", I find your criticism of it baffling. Is it only okay to wonder about such things if you're not a New York Times columnist?

A brief, but key, section:

quote:
But if the U.S. government prints money to pay its bills, won’t that lead to inflation? No, not if the economy is still depressed.

Krugman is clearly talking about a very specific case here (a nation with a depressed economy, its own currencey, and government debt denominated in that currency), not government debt generally.

quote:
Originally posted by tclune:
. . . but the notion that the debt is no longer important is as outrageous now as it was when Dick Cheney asserted it a decade ago.

Actually Dick Cheney's assertion was about the deficit, not the debt more generally.

--------------------
*The NYT has a ridiculous paywall that only lets non-subscribers view ten articles per calendar month. Only click through if you're a subscriber or willing to use one of your ten monthy Times passes.

Posted by Zach82 (# 3208) on :

quote:
Can you finish your sentence please. Because republicans --what?

Because republicans like putting on the fiscal responsibility game when they aren't in power. There is also a tendency, not solely but mostly on the American right, to think of the US government as a household or business and to apply folksy understandings about debt to the situation.

But the US is not a household. Issuing bonds is how governments operate. Debt is how governments operate. It's only a problem when the payments are more than a nation can manage, and the US is most definitely not in that situation. Not even close.

quote:
Also, do you mind, if you have the info re the EU countries and US percentages source info, can you post a link or two? Thanks.

Type "most indebted nation" into google and you will get all the sources you need. Those numbers in particular came from a CNBC article, the first one that comes up.

Posted by Honest Ron Bacardi (# 38) on :

quote:
Originally posted by Zach82:
Just for a comparison, Germany, that bastion of financial responsibility in the EU debt crisis, has an external debt equaling 184% of its GDP. France is at 254%. The UK has 451%, while Ireland is at a staggering 1,239%.

The United States is at 99%.

Those would be national external debt figures, i.e. govt. plus private plus corporate debt. That can be a problematic figure to interpret, especially if a country is heavily reliant on the banking sector, which borrows heavily. For example, Luxembourg has an external debt of 3443% ($3.7Million dollars per person.)

Posted by Zach82 (# 3208) on :

More fun facts about the US debt: interest payments ate up only 6% of US tax revenues in 2011. Medicaid/Medicare took the largest portion, at 23%. Discretionary spending, the thing that has been paralyzing Congress every time it comes budget time, was only 18%.

Source, if you really need it.

Posted by Zach82 (# 3208) on :

I hate to spoil my own case with my imprecision here. While only 6% of the budget last year, interest payments were 9% of tax revenues.

Still, that's compared to Germany's nearly 16%.

[ 26. November 2012, 18:39: Message edited by: Zach82 ]

Posted by Crœsos (# 238) on :

quote:
Originally posted by Zach82:
More fun facts about the US debt: interest payments ate up only 6% of US tax revenues in 2011. Medicaid/Medicare took the largest portion, at 23%. Discretionary spending, the thing that has been paralyzing Congress every time it comes budget time, was only 18%.

Source, if you really need it.

It should be noted that the real yield curve rates for U.S. bonds (i.e. the rate of return after factoring in expected inflation) is currently (November 23, 2012 is the last date available) negative for bonds of ten years maturity or less, and zero for twenty year bonds. In other words, investors are practically begging the U.S. to let them lend it money at rates where the U.S. can essentially make its interest payments in the form of economic growth and inflation, rather than in form of money.

Exactly why the U.S. isn't taking advantage of what is essentially free money to embark on some badly-needed infrastructure improvements (and simultaneously going a long way to solve its unemployment problem) is a bit of a mystery.

Posted by Zach82 (# 3208) on :

quote:
Exactly why the U.S. isn't taking advantage of what is essentially free money to embark on some badly-needed infrastructure improvements (and simultaneously going a long way to solve its unemployment problem) is a bit of a mystery.

Because republicans.

Posted by Mr. Rob (# 5823) on :

quote:
Originally posted by no prophet:

Isn't the USA is essentially bankrupt ..?

Only according to what's left of the Romney Republicans and the faculties of

* Liberty University
* Oral Roberts University
* Bob Jones University

and

* The National Review

[Snigger]

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