America has a $14 trillion economy and to run that economy takes a great deal of energy from many resources. Oil, coal, nuclear, natural gas and renewables all play key roles in making sure that, whether at home or on the job, America has the energy resources it needs to keep the world’s largest economy running.
For every 3% increase in our nation’s gross domestic product there is a corresponding 1% increase in energy demand. Simply put, the 50% increase in the U.S. GDP since 1993 has seen a corresponding 17% increase in energy demand. One reason US imports of oil, natural gas and electricity have all risen since 1993 is due to this fact of an expanding economy resulting in increasing energy demand and the US is not producing more at home to meet this demand.
This isn’t to say conservation is ignored in the discussion. ICPA created the first Fuel Oil Conservation program in the nation in 2008. Our program, initially focusing on low income energy assistance program recipients, proved that for every $1 spent on conservation measures we avoided $3 in energy costs. Unfortunately, due to the state budget crisis all but $2.5 million of our $15 million appropriation was sent to other spending needs. Conservation, as with energy production, needs both a long-term view and considerable investment.
America needs a permanent, long-term policy for increasing domestic energy production as well as developing resources with our largest trading partner in energy, Canada. Here are just a few examples:
Bakken. There is a reason North Dakota has a 3.2% unemployment rate, the nation’s lowest. The Bakken shale oil reserve is estimated at 4.3 billion barrels and produces 400,000 barrels per day now. It is estimated that by the end of this decade that production will exceed 1 million barrels of oil per day. Taking more advantage of this resource will require eliminating bottlenecks in pipeline capacity to move the crude from North Dakota to refineries in the Mid-West and Gulf Coast as much of this production is currently moved by rail.
Gulf Coast. More than a year has passed since the blowout of the Macando well and oil spill that followed in the Gulf of Mexico. As we look back on that tragic event, we first and foremost remember the lives of those eleven men who were lost. Another memory is of course the federal government’s decision to shut down all offshore oil and gas operations in the Gulf region. Faster permitting of offshore oil and gas projects could create nearly 230,000 new jobs in 2012 and boost the economy by $44 billion, including a surge in tax revenue. We’ve lost more than 250,000 bbls a day in production from our own Gulf Coast and that needs to be restored.
Keystone XL Pipeline. Within a few years of its completion, Keystone XL would deliver upwards of 830,000 barrels of oil per day (b/d) from Canada’s oil sands region to U.S. refiners, creating tens of thousands of U.S. jobs. The Energy Information Administration reports that with the additional 830,000 b/d, U.S. production and secure, reliable Canadian imports would supply 57 percent of our crude oil needs – up from 51 percent in 2010.
Given the prospect of access to that much oil from a good neighbor and ally, you’d think government approval would be a no-brainer. Unfortunately, not. This week the Environmental Protection Agency suggested that pipeline review by the State Department (charged with approving the project) has been flawed and called for more scrutiny – after three years of study already. TransCanada, the pipeline’s builder, hoped to get approval by last summer!
Most of all, there’s the energy. Keystone XL would be part of an access strategy – along with areas currently off-limits to exploration and production in the U.S. and offshore – that by 2035 could provide 92 percent of this country’s liquid fuel needs, according to calculations based on government estimates and other research. In other words, the pipeline could deliver crude oil at levels that would impact U.S. imports of non-American oil. “This kind of quantity can make a big difference to us and to the world in terms of having extra supplies from such a reliable source,” said API Senior Economist Rayola Dougher.
Alaska. Even more domestic offshore drilling will be required if our country is to increase its stable and secure energy. One reasonable place to accomplish that goal lies beneath the waters off of Alaska’s northern shores. According to government estimates, that area holds approximately 27 billion barrels of oil, more than the individual petroleum resources of all but eight countries. It also contains 132 trillion cubic feet of natural gas, enough to supply the United States for six years. With our demand for oil and natural gas expected to increase during the coming decades, we cannot afford to leave that energy untapped. Responsibly developing Alaska’s immense resources has the potential to mark a new chapter in America’s energy future.
No one denies America and Connecticut will gradually have a more diversified energy portfolio that includes oil, gas, coal, nuclear and renewables. These transitions are not instantaneous and take massive private investment to realize any full potential. We need America back in the business of producing more domestic energy and developing energy projects with neighbors where that makes good energy and economic sense.
If we want lower and more stable energy prices America needs to [a] expand domestic production from where we can produce more energy safely and economically, [b] reduce federal impediments to domestic energy production, [c] reduce federal impediments to important energy projects with Canada, as with the Keystone pipeline, [d] expand domestic energy transportation projects with new pipelines from the new resources, [e] keep the federal government from debasing the value of the USD, and if we accomplish these important energy and monetary goals energy speculation challenges weigh dramatically less on our economy and energy markets.
America is doing dramatically better in energy conservation, though we have a long way to go. According to the Congressional Research Service, America is sitting on the largest fossil fuel deposits on earth. All we need is the vision, commitment and will to use these resources safely and in an environmentally responsible way. Energy conservation and energy production are not mutually exclusive conversations in our public policy, as America needs to continue to make progress on both fronts.
America consumes 25% of the world’s energy because America produces 25% of the world’s total economic output – and all with only 5% of the world’s population. That is truly an example of American exceptionalism to be celebrated! Let’s make sure we have access to the energy resources we need to keep this economic miracle growing and serving our own nation and the world.