WSJ: SAUDI AMERICA?
Sometimes the revolution politicians seek isn’t the one they get. Consider the irony—and the opportunity—in Monday’s report that the U.S. is likely to surpass Saudi Arabia as the world’s largest oil producer as early as 2020.
In its annual world energy outlook, the Paris-based International Energy Agency (IEA) says the global energy map “is being redrawn by the resurgence in oil and gas production in the United States.”
The U.S. will increase its production to about 23 million barrels a day in 10 years from about 18 million barrels a day now, the IEA predicts. That’s more optimistic than current U.S. government estimates and a change from a year ago when the IEA said Russia and the Saudis would vie for number one.
As readers of these pages know, the key to this U.S. energy boom has been technological innovation and risk-taking funded by private capital. Specifically, the private oil and gas industry pioneered the use of horizontal drilling and hydraulic fracturing (or fracking) to tap unconventional deposits such as shale that once were technologically out of reach. It also wouldn’t have happened if the industry wasn’t able to drill on private land, free from federal regulation.
This is a real energy revolution, even if it’s far from the renewable energy dreamland of so many government subsidies and mandates. In his 2007 State of the Union, George W. Bush—the Oil Man President of liberal myth—said America was “on the verge of technological breakthroughs that will enable us to live our lives less dependent on oil.”
His main solution: “We must continue investing in new methods of producing ethanol—using everything from wood chips to grasses to agricultural wastes.” The wood-chip revolution remains nowhere in sight, though that didn’t stop President Obama from doubling down on the taxpayer investment in renewables, with similarly failed results.
The fad also caught on in Britain, with Conservative Prime Minister David Cameron promising a “Green Deal” that was supposed to make the U.K. a world leader in all things green. After two and a half years in office, Mr. Cameron has little to show for it besides rising energy prices for consumers and a burgeoning collection of subsidy-dependent wind farms.
One point to keep in mind is that this U.S. energy revolution wasn’t inevitable and could still be undone. The Sierra Club and other environmentalists are demonizing fracking the way they have coal, never mind that increased use of natural gas instead of coal is helping to reduce carbon emissions. They hate carbon energy—period.
New York state has imposed a moratorium on fracking, even while the economy of neighboring Pennsylvania is being transformed by the exploitation of the Marcellus Shale that lies under both states. The French, who import 98% of their natural gas, have also banned fracking, despite sitting on shale reserves estimated to be the second-largest in Europe. The British, unsure of what to do, are supposed to make a fracking announcement sometime next month.
The biggest potential threat may come from federal regulation in Mr. Obama’s second term. Though he tried to take credit for the fracking revolution in his second debate with Mitt Romney, his EPA has long wanted to supplant state regulators and will grab any opportunity to do so. Perhaps the election of pro-fracking Democrats like soon-to-be Senator Heidi Heitkamp of North Dakota (home to the monster Bakken Shale field) can give the new energy revolution some needed bipartisan buy-in.
Historians will one day marvel that so much political and financial capital was invested in a green-energy revolution at the very moment a fossil fuel revolution was aborning. But politicians failing to spot the trend until they start taking credit for it is an old story. Let’s hope they don’t ruin it now that they’ve noticed.
Printed in The Wall Street Journal, page 16
A version of this article appeared November 13, 2012, on page A20 in the U.S. edition of The Wall Street Journal, with the headline: Saudi America.
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