February 2012

Energy Issues

Name game, same game

William J. Pike / World Oil

Let’s begin with a challenge. Below are eight quotes. Try to match the quote with the person who made it.

  1. “We will continue supportive research leading to development of new technologies and more independence from foreign oil.”
  2. “We need a long-term energy strategy to maximize conservation and maximize the development of alternative sources of energy.”
  3. “Let us set as our national goal, in the spirit of Apollo, with the determination of the Manhattan Project, that by the end of this decade we will have developed the potential to meet our own energy needs without depending on any foreign energy source.”
  4. “For decades, we have known the days of cheap and accessible oil were numbered… Now is the moment for this generation to embark on a national mission to unleash America’s innovation and seize control of our own destiny.”
  5. “There is no security for the United States in further dependence on foreign oil.”
  6. “This intolerable dependence on foreign oil threatens our economic independence and the very security of our nation.”
  7. “I am recommending a plan to make us invulnerable to cutoffs of foreign oil… new stand-by emergency programs to achieve the independence we want…”
  8. “This country can dramatically improve our environment, move beyond a petroleum-based economy, and make our dependence on Middle Eastern oil a thing of the past.”

Since you have probably already read the answers at the bottom of the page, you have figured out that every U.S. president since Richard Nixon has promised to end America’s dependence on foreign oil. They have been empty promises.

And, if you think things are going to change, think again. Here we are now engaged in that rudest, most irritating public spectacle, the national campaign process. How I wish I lived back in the UK where the campaign process is limited to a month. Not here. We are bombarded constantly for 18 months and more. No news seems to be more important than the inane babble of the potential presidential candidates. I honestly believe that, if an asteroid was set to destroy the Earth next week, that news would take second place to the daily political posturing. A good deal of this noise centers on promises to secure the nation’s energy future.

Both of the serious Republican candidates (at this point), Newt Gingrich and Mitt Romney, have publicly announced their support of increased land access and drilling to further develop the nation’s large oil and gas reserves. Both have supported continuation of tax breaks for certain exploration and drilling scenarios. Libertarian Republican candidate Ron Paul has supported the same.

President Obama also has a plan to secure America’s energy future. Oil and gas does not figure largely in his plan. Instead, the President is determined to push alternative, renewable sources of energy. It could be a laudable plan, if it were realistic. Unfortunately, it is not realistic. The timeframe to develop reliable renewable energy to supplant significant amounts of current fossil energy use runs into decades, according to the government’s Energy Information Agency. While playing up the potential of shale gas in the U.S., Obama recently rejected the Keystone XL pipeline on environmental grounds. The pipeline, planned to connect the Alberta oil sands with the Texas Gulf Coast refining network, would have brought about 750,000 bopd into the country.

With regard to either stance—Democrat or Republican—it all comes to naught. Claims that the U.S., or any other country, can control its energy destiny singlehandedly ignores the realities of a globalized economy. To be sure, things are looking up for the U.S. Significant increases in oil and gas production from shale plays are adding to energy security, but they will not secure it, at least with regard to oil. That leaves the country at the continued mercy of major exporters of crude. As the current tension with Iran illustrates, many of these exporters are at odds with Western policies and retain the ability to curtail their own oil exports, or worse. Short of a series of military excursions, of which the American public has grown tired and are likely to be counterproductive, there is no option.

But that is hard for the country to accept. We look back to the 50s and 60s, the decades immediately following WW II. Energy was abundant and the economy exploding. We did control our own energy destiny, with a bit of help from our friends. We largely controlled our own economy. Those days are past. This is the real world of an interrelated global economy. What happens elsewhere—things that we cannot control—impacts us and limits our options.

If we can’t do anything independently to establish energy security in the short or medium term, at least we should be able to amend this excruciating campaign fiasco. Again, it is not likely to happen – not because most people don’t want to. Rather, it is because our political system has dramatically changed. The Founding Fathers envisioned a country where elected officials offered their services for the betterment of the country. They served and stepped down. Today’s politicians are professionals looking for permanent employment, with few exceptions. They serve for the betterment of themselves as much as the country. It’s a poor system, but it looks like we are stuck with it, and with energy dependency. wo-box_blue.gif

Answers: A, Ronald Reagan; B, Bill Clinton; C, Richard Nixon; D, Barack Obama; E, George W. Bush; F, Jimmy Carter; G, Gerald Ford; H, George H. W. Bush

About the Authors
William J. Pike
World Oil
William J. Pike has 47 years’ experience in the upstream oil and gas industry, and serves as Chairman of the World Oil Editorial Advisory Board.
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