We could use some good news this week, and here it is courtesy of The Wall Street Journal: The United States is now or soon will be the world’s largest producer of oil and natural gas. We’re No. 1.
The International Energy Agency estimates the United States now produces the equivalent of 22 million barrels of oil and natural gas per day, the Journal reports. Russia, the former or soon to be former No. 1, produces an estimated 21.8 million barrels per day. This, as we say in our cliché-ridden world, is a remarkable turnaround. Just seven years ago we were an energy-starved glutton stumbling along with declining fossil fuel production, rising imports, suffering from permanent dependence on unfriendly oil exporting nations, with politicians of all stripes claiming we could reach our liquid “energy independence” by subsidizing corn, burning food and fermenting grass. As they spoke, human ingenuity and the profit motive were hard at work finding ways to extract heretofore trapped oil and gas from deep shale formations. Despite environmental resistance and government reluctance, it has proven to be remarkably abundant.
The Wall Street Journal also reports that Saudi Arabia remains the world’s largest producer of oil and related products, pumping 11.7 million barrels a day as of late. Russia is second, at 10.8, but the United States is third and closing, at 10.3 million barrels per day. The United States, the Journal notes, pumps more than twice the daily output of big players like Canada and Venezuela. It was only last May when the U.S. Energy Information Agency was predicting U.S. oil output would reach 8.5 million barrels a day by the end of 2014. Apparently, our drillers and pumpers are hard at work proving everybody wrong and exceeding all expectations.
This bounty of fossil fuel is not setting off celebrations everywhere, of course. The geopolitical consequences are just beginning to be understood. Russia will lose markets and income. OPEC will lose clout and control. U.S. electricity production will shift slowly, from coal to natural gas, far cleaner and much less a contributor of greenhouse gases. For the United States economy, imports will fall and exports rise. The U.S. current accounts deficit fell in the second quarter, the Commerce Department reported, to the lowest level since the depths of the great recession in 2009.
Major investments are now being made in facilities to export U.S. natural gas in liquid form, to take advantage of overseas markets where gas prices are far higher. The Department of Energy has approved some export facilities, most recently at Cove Point in Maryland. The Washington Post editors commented that the price of natural gas at Cove Point is now $3.22 per million BTUs. The price in Japan, $15.35. Environmentalists vow to block the project, of course. “They should find a better use for their time,” said the Post’s editors.
Like it or not, fossil fuels in an energy-hungry world are a vast store of wealth. Our concern for the environment and our distrust of industry should not diminish our gratitude for this newfound abundance. The increased use of natural gas for electric generation and eventually transportation will be a net benefit to the environment, through reduced greenhouse emissions and reinforcement for intermittent wind and solar. The feared environmental damage from drilling has proven again and again to be vastly exaggerated. The standard tactic of imagining potential environmental calamity and leaving it to others to prove it will never happen, has mostly failed, stalling progress only in gullible states like New York and California.
So, it is good news. We’re No. 1, at least for now. Enjoy.
Tracy Warner’s column appears Thursdays and Fridays. He can be reached at firstname.lastname@example.org or 665-1163.