- The Washington Times - Sunday, October 23, 2011


While the Obama administration has been busy lining the pockets of its campaign contributors with solar-power handouts, an energy revolution is taking place that even the Washington Luddites and federal Gosplanners can’t buck. American technology, borrowing offshore deep-water drilling techniques, has started exploiting huge deposits of natural gas buried deep in the Earth below shale rock across the country. It would be hard to exaggerate the meaning of this “new” fuel for the American economy and the world - what with three-quarters of the known new resources outside North America.

These discoveries already dwarf proven conventional gas reserves. A decade of early exploitation by American technological pioneers has produced a domestic natural gas surplus, so much so that U.S. prices are a fraction of liquefied natural gas (LNG) prices in East Asia. There appear to be export prospects as soon as ocean terminals designed for LNG imports can be refitted - the first significant exports since the 1973 Arab oil embargo.

Billions of investment dollars already are rolling in for both U.S. upstream drilling and pipeline distribution rationalization - including from the Norway’s savvy Statoil and Chinese state oil companies. Yes, Beijing is not only looking for solid equities but also wants technological transfers for its own deposits, which are double the current U.S. estimates. A similar story is beginning to unfold from Poland and France - although Paris is hesitant because of its massive existing investment in nuclear power - to Canada, Brazil, South Africa, Australia, Israel, India and Chile.

The question now is whether the Obama administration will treat the industry with benign neglect. It’s no secret where the administration’s heart is: In 2008, candidate Barack Obama warned of the inevitability of “skyrocketing” energy bills under his energy plan, in a scenario intended to force a shift from fossil fuels to more expensive so-called renewable “green” energy options. You would think that, what with windmill imports from China and Spain so severe that U.S. firms are asking Congress for tariff protection and with the fiasco in solar energy subsidies, the feds and their environmentalista camp followers would back off. Logic dictates their Jeremiah-like warnings of rapidly approaching “peak oil” - the time when increasing global demand and depleted fossil fuel supply will meet - is now even more distant.

But warning signs came with the August release by the Obama Energy Department of a 90-day “study” (without industry representation) of safety standards for the new technologies, ignoring already-formulated industry “safe practices.” There could be contamination of the water supply, even though most shale gas lies at depths far below the aquifers. And there have been some miscreants. But the industry - well aware of the opposition the environmentalistas can mount - already is planning ways to police itself.

What is self-evident is that increased sources of natural gas - the least polluting of all fossil fuels - is going to revolutionize the whole energy-and-environment debate. Although the $2,000 cost of retrofitting a Detroit car to use natural gas rather than gasoline or diesel is a minor stumbling block, a network of filling stations would require big investments to effect a massive U.S. shift to natural gas vehicles.

Still, the glitterati’s fascination with electric cars ignores the fact that 60 percent of the nation’s demand for electricity is supplied by coal-fired turbines. (There is already a surfeit of recharging plugs for electric cars, selling poorly despite all the hoopla.) And, of course, gas-fired generating plants are the fastest way to meet rapid increases in electricity demand.

Other opportunities for a changeover are closer. It is conceivable that truck fleets could move quickly to the “new” fuel. A number of new petrochemical plants using broken-out elements of shale gas promise new jobs, bringing production back to the U.S. There is growing interest, too, in high-energy requirements for the expansion of recycled scrap metal for specialty steels. The international implications, politically as well as economically, are equally promising: Moscow’s attempt to blackmail Western Europe with its gas monopoly and the growing power of the unstable Persian Gulf OPEC LNG producers will both be eroded.

Bottom line, as Texas Gov. Rick Perry has argued, American economic recovery demands access to new energy. That’s not new. U.S. development always has depended on cheap energy, from our Colonial forests to the development of early 20th-century petroleum. Now, again, the shale gas revolution holds out that promise at a time when the economy desperately needs a shot in the arm.

Sol Sanders, a veteran international correspondent, writes weekly on the intersection of politics, business and economics. He can be reached at solsanders@cox.net and blogs at https://www.yeoldecrabb.wordpress.com.

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