Update 2015 – Solving America’s Energy Dilemma

© David Burton 2015

2005 – America’s Energy Dilemma
     Back in November of 2005, I wrote about the energy dilemma facing America at that time. (Ref. 1) Now, nearly 10 years later, let’s see what has changed in the intervening decade and what our government has done and is doing relative to meeting America’s ever-increasing need for a secure, stable, plentiful, affordable, and environmentally friendly energy supply.

     Here is what I had to say in my November 2005 article (extracted and edited).

     In late 2005, America was finally opening its eyes to the fact that an energy problem existed, and would likely get worse before it got better. At that time, an American and global energy problem had existed for at least 3 decades. Some 30 years previous, in 1973, several Arab exporting nations had imposed an embargo because of the Arab-Israel Yom Kippur war.

     This Arab oil embargo brought to the attention of the American public the fact that we no longer controlled our supply of Petroleum. We found out that we were highly dependent upon imported oil, primarily imported Arab oil. Arab nations curtailed production by 5 million barrels per day (MMBPD), with about 1 MMBPD being made up by increased production in other countries. The net loss of 4 MMBPD extended through March of 1974 and represented 7% of the free world’s production. (Ref. 2)

     The cost of a barrel unrefined oil jumped from well under $20 to a peak of $42, spurring double-digit inflation and a painful recession. But, after a second oil shock in 1979-80, oil’s price hit a new high of $98 a barrel (Ref. 3). In addition to the skyrocketing cost of oil and gasoline, motorists queued up in long lines at gas stations simply because there was a resultant shortage of fuel at any price.

     Back then, much of America’s economic and national security was mortgaged to potentially unstable Middle East suppliers. Some of the world’s most unstable or despotic nations were(and still are) sitting atop vast oil reserves: Saudi Arabia, Iran, Venezuela, Nigeria and Russia. This was not a desirable situation.

     Reacting to the Arab oil embargoes of the 1970’s, America embarked on an energy conservation program (speed limits were reduced to 55 mph), stepped up the exploration for new sources of oil (resulting in the opening of the North Slope oil fields in Alaska), improved oil and gas extraction efficiencies, and increased research into alternative sources of energy (solar, wind, geo-thermal, etc.). Unfortunately, as is usually the case, the collective American memory was quite short. When the crises passed, most of these initiatives stopped or slowed as we preferred to shut our eyes and ignore the basic problem.

     Back in 2005, the adverse impact of the “environment first – people last” zealots was noted when it was said that strong environmental lobbying had prevented the building of new refining capacity for about 30 years. Further, not all existing refining capacity could be utilized, because of maintenance and upgrading aimed at expanding output potential.

     Until the oil shortages resulting from the Arab embargos, the explosive growth in the cost of crude oil, and the disastrous effects of hurricanes Katrina and Rita on our domestic fuel production and oil supplies, America had refused to face reality.

     With respect to the concerns of environmentalists, it was noted that while ecological concerns were real, restoration efforts in Canada had shown that these concerns could be met. In spite of the doomsday predictions of ecologists, modern technology had consistently proven that, where there’s a will there’s a way. It need not be “humanity or nature” - instead, it could be “humanity in balance with nature” and yes, we could extract resources from the earth while protecting or restoring the environment.

     In 2005, the impact of a shortage of natural gas was also all pervasive in America’s economy. The chemical industry, the nation’s largest consumer of natural gas, both for energy and as a chemical feedstock, was rapidly moving offshore in search of cheaper gas – and taking jobs and capital with it.

     In addition to increasing the supply of domestic natural gas, industry also wanted legislative relief that would make it easier to win approval for construction of marine terminals for the import of Liquefied Natural Gas (LNG). However, coast dwellers were able to use the public’s not entirely rational fear of fireballs and environmental impact to block plans for LNG terminals.

     Oil, coal and natural gas are non-renewable sources of energy and cannot be replaced as they are used up. On the other hand, renewable sources of energy can be replaced, primarily from the energy produced by the sun in one way or another. It was recognized that one aspect of any comprehensive energy policy had to include the increased development of renewable and clean sources of energy. These sources included hydroelectric power generation, wind power, burning and gasification of wood and biomass, geothermal, solar, and burning and gasification of municipal solid waste. Further out, the so-called hydrogen economy was a major hope for renewable energy. As of 2005, hydroelectric plants were responsible for the vast majority of the renewable power generated in the United States, but their output was expected to increase only slightly over the subsequent 20 years.

     In 2005, offshore wind turbine farms were being proposed along the coast of the United States, including one in Nantucket Sound, off Cape Cod. Another was proposed off the southern shore of New York’s Long Island. The Nantucket project in federally controlled water was being attacked in court by the “Not In My Back Yard” (NIMBY) opponents because of fears it would ruin the ocean view from their Cape Cod mansions.

     The wind power industry in 2005 was, even then, fighting a battle with the environmentalists who argued that large turbines kill migratory and other birds and with NIMBYs who objected to the sight of wind generation turbines spoiling their pristine views of nature.

     Nuclear power plants consume no fossil fuel and produce no harmful greenhouse gasses. On the other hand, spent fuel presents a problem in disposal and storage. Also, the danger of the catastrophic release of harmful radiation, while highly unlikely in a properly designed and maintained nuclear power plant, is still real. Having said all this, the conclusion of many unbiased rational people, was (and still is) that the benefit-to-risk ratio strongly favors a greatly expanded and expedited nuclear power plant development program in the United States.

     The rising oil and gas prices and dwindling supplies of 2005 changed the American economic picture. The specter of foreign oil embargoes and foreign control over supplies of LNG were changing the American mindset, while emissions from fossil fuel powered electrical generation plants were under increasing attack from environmentalists.

     Improvements in a wide range of technologies were enabling the construction of very safe and less expensive nuclear power plants. Also, the permitting process was streamlined in 1992 by a change in federal law that shortened and simplified the procedures for obtaining a license. The federal government was also sharing the financial risk by providing subsidies to companies wanting to build new U.S. nuclear power plants.

     Potentially, nuclear power plants could support a move away from hydrocarbon fuels toward the “hydrogen economy”. It could do this by using the electricity it produces to directly split water into hydrogen and oxygen through electrolysis, without creating air pollution. Also, hydrogen could be directly produced by splitting water molecules with the extremely high temperatures that exist inside nuclear reactors.

     While the problem of nuclear waste disposal still exists, it is by no means insoluble. Several solutions have been proposed. One solution, (Ref. 4) called “deep borehole disposal”, involves drilling a hole about 1 ft. in diameter down some 2.5 miles through the earth’s crust into granite rock formations “that have sat undisturbed for billions of years.” Some four hundred 1 ft. diameter, 15-ft long containers of nuclear waste are then lowered into the hole, which is topped with absorbent clay and concrete.

     In the United States, Granite underlies much of the U.S., thus allowing for regional depositories that could significantly cut the costs and risks of transportation. So why aren’t we using this technology now? Because a federal mandate exists that requires nuclear waste stowed anywhere to be retrievable for 100 years in case anything goes wrong. What is needed now is the revocation of this mandate, the funding of the additional studies to verify the safety of the process, and the immediate start of test-drilling to verify the practicality of the process and to iron out any bugs. For too long, the U.S. has let the problem of nuclear waste disposal go unsolved. From 2005 to 2015, our government has done essentially nothing to resolve the nuclear waste storage problem.

     In 2005, America had less than 5% percent of the world’s population but consumed about 25% of the world’s petroleum production. Other nations, however, were catching up. To meet its ever-growing energy needs, the U.S. had to get serious about energy conservation. One way to encourage, if not force, energy conservation, would be to increase the cost of energy - gasoline in particular. Americans, as in most of the world, would then take the necessary steps themselves to reduce gasoline consumption. We would drive less, and buy more energy efficient vehicles. We would demand that such things as computer synchronized traffic signals be extensively introduced. Today, in 2015, we are producing more energy efficient vehicles, but the push for energy-conserving traffic control systems such as computer-controlled traffic signals has stalled.

     In a special issue of Scientific American, (Ref. 5) the following points were made: “Improving end-use efficiency is the fastest and most lucrative way to save energy.” It was pointed out that, “The world abounds with proven ways to use energy more productively, and smart businesses are leaping to exploit them. Over the past decade, chemical manufacturer DuPont has boosted production nearly 30% but cut energy use 7% and greenhouse gas emissions 72%.” and “Although the U.S. government has declared that bolstering efficiency is a priority, this commitment is mostly rhetorical.”

     One area where energy conservation has taken hold in the last decade is that of lighting. Both the consumer and the American government have been responsible for this improvement. Private consumers, industry, and municipalities are all turning away from incandescent lighting. The U.S. government has now mandated that incandescent light bulbs no longer be sold. As of 2005, lighting gobbled 22% of the electricity used in this country and incandescent light bulbs are, for the most part, horribly inefficient at converting electricity into visible wavelengths. Edison’s incandescent bulb runs at an efficiency of scarcely 2%.” Fluorescent bulbs, sodium vapor lamps and Light Emitting Diode (LED) lamps are all considerably more energy efficient and even more cost effective. In addition to being used for interior lighting, LEDs are now showing up in vehicles, traffic lights and street lights. LED efficiency continue to rise as its cost is decreasing.

     The lack of a comprehensive and balanced energy policy in the United States was summarized in the May 2005 issue of MIT’s Technology Review. (Ref. 6) “Alternative energy technologies are increasingly effective - in terms of both technological soundness and economic competitiveness - and may soon mitigate some of the myriad geopolitical, health, and environmental problems rooted in our dependence on fossil fuels. Modern nuclear power plant designs reflect lessons learned from 50 years of reactor operation and could benefit from materials and control systems unavailable in the 1960s and 1970s. Wind turbines and solar cells that convert sunlight directly into electricity are on the verge of competing more broadly against conventional sources of energy. Other technologies, like fuel cells, require more research but hold great promise. Today, 10 years later, this predicition has proven to be somewhat true.
     “All of the above, however, suffer from official neglect in the United States, which lacks a consistent national policy aimed at bringing alternative energy technologies into common use. . . . The United States lacks a consistent long-term plan to give renewables a more secure footing through initiatives like federal financing, tax credits, grid-connection mandates, and streamlined construction rules. To some degree, this statement and prediction have proven to be less than completely valid. The U.S. government, American industry, and the American people have all embraced much of the new, more energy efficient energy technologies – witness the rapidly growing market for LED and CFL (Compact Fluorescent Light) light bulbs, the increased use of solar roof panels on houses and the increasing number of electric wind-driven generators. Still, an all-embracing federal energy strategy continues to be missing.
     “As for nuclear power, in the United States, innovative technologies languish, while overseas, plans to build new commercial plants are gathering momentum. . . . But when we talk about nuclear power in the United States, it’s mainly to continue the endless arguments about where to put radioactive waste.”

     Also from Reference 6, note the following: “… in March, legislators passed a bill that promotes the adoption of renewable electricity technologies. It includes a national fund to help pay for initial development, favorable lending and tax rates, and a requirement that electrical-grid operators adapt to renewable sources. Trouble is, the bill passed in China’s National People’s Congress. On Capitol hill, an energy bill has been stalled for years, bogged down by controversial provisions …” While there is beginning to be some encouraging developments in the government, “they are not a comprehensive strategy.”

     As pointed out in Reference 7, the government’s reaction to the rise in gasoline prices after hurricanes Katrina and Rita, was to haul oil executives into hearings on “price gauging.” Even by Senate standards, the cynicism here was breathtaking. Everyone knew what the problem really was. It was Economics 101 - increasing demand and tight supply. Yet for three decades we did criminally little about it. Conservatives argued for more production, liberals argued for more conservation, and each side blocked the other’s remedies - when even a child could see that we need both.

     Relative to the supply side problem, it was pointed out that the United States had been dithering for years over drilling in a tiny part of the Arctic National Wildlife Refuge (ANWR). Dire predictions about the devastation that Prudhoe Bay oil development would visit upon the caribou proved false. Let’s get serious. We live in perpetual vulnerability to oil blackmail. We have soldiers dying in the oil fields of the Middle East, yet we were leaving untouched the largest untapped oil field in North America so that the Lower-48ers could enjoy an image of pristine Arctic purity. This indulgence bordered on decadence.

     So was (and still is today) our refusal to drill on the continental shelf. Off-shore drilling technology is far safer and more efficient than it was decades ago when this ban was passed.

     The same logic applies to refineries. As of 2005, we had not built a new refinery in 30 years. The U.S. refining industry was operating at 96% of capacity. That was unsustainable. What was needed was an expedited regulatory process to allow a crash program to site and build a dozen or more new refineries.

     The needed governmental actions could have removed the oil noose. But the Senate loved its oil-exec inquisition. In 2005, the House stripped out the ANWR drilling provision. And there was not one politician who dared to propose raising gas taxes. Our government was then (and still is today) unserious about instituting a realistic and comprehensive energy program in this country. Most, if not all, progress in this regard has been achieved by the private sector of our economy, in spite of government foot-dragging, political grand-standing, and outright obstruction.

     With respect to the ever-popular, populist and politician generated charges of price gouging by “big oil”, even the Boston Sunday Globe, (Ref. 8) a very liberal leaning newspaper, excoriated Congress for its demagoguery in unfairly blasting big oil’s supposed gluttony and demanding that it be punished for its “infuriating” windfall profits. The Globe noted that while ExxonMobile reported $9.9 billion in profits last quarter, ”big oil” would pour an estimated $86 billion into developing new technology and increasing oil production.

     One cannot judge whether profits are “obscene” by the amount of profits. Large well-run companies make larger profits than small well-run companies. To put the oil company’s profits into perspective, a more relevant measure of “price gouging” is the percentage of revenues that these profits represent, e.g. In the third quarter of 2005, Exxon earned 9.8 cents for every dollar of sales, Shell - 7.8 cents, Chevron - 6.6 cents and BP - 4.6 cents. In comparison, Coca-Cola earned 21.2 cents, Bank of America - 28.3 cents and Microsoft - 33.2 cents. Why didn’t Congress call for investigation of their “obscene” profits? Because that wouldn’t put our senators on television and they wouldn’t get their names on the 6 PM news or in the morning newspapers.

     Giving tongue lashings to the heads of big oil may be good politics, but the real fact is that big oil as a whole only earned 7.7 cents per dollar of sales in the 2nd quarter of 2005 and that is 0.2 percent lower than the U.S. corporate average. Again, in comparison, the semiconductor industry earned 14.6 cents, pharmaceuticals - 18.6 cents, and banks -19.6 cents.

     In fact, the real gas and oil profiteers weren’t represented by the CEOs getting grilled on Capitol Hill last week, but by the demagogues doing the grilling. Over the past 25 years, according to the Tax Foundation, oil companies paid state and federal income taxes of more than $2.2 trillion (in inflation-adjusted dollars). During the same period, the oil companies’ profits totaled $630 billion - less than a third of the government’s take. Government revenue from gasoline taxes alone has exceeded oil industry profits in 22 of the past 25 years.” (Ref. 8)

     Some ten years later, our politicians are still trying to make headlines by threatening to punish “big oil” for supposedly ripping off the American public. Massachusetts Senator Ed Markey has proposed “ending tax giveaways” for “big oil.” Markey has distorted the picture in a way that suggests the IRS is handing over bags of cash to oil and gas companies that it doesn’t give to anyone else.

     “In fact, ‘big oil’ is subject to the same tax treatment as similar U.S. corporations. It’s just that Markey . . . and {his} like-minded colleagues and supporters think oil companies should be subject to higher taxes. So they decry the ‘subsidies’ and ‘giveaways’ that they say make the industry so profitable.” (Ref. 9)

     Markeys’ bill would prevent the nation’s largest oil companies from using the Last-In-First-Out (LIFO) method of accounting for inventory. LIFO is currently allowed as an accounting method for essentially every business, big or small, and every individual tax payer in this country! But “big oil” would be singled out for special treatment! In Senator Markey’s world there are “good” corporations and there are “bad” corporations, and “big oil” companies fall into the second category. So, why not look for some publicity by threatening to use the IRS and the tax code to punish them for making a profit? In so doing, Markey can portray himself as the savior of the poor and downtrodden masses who are being exploited and robbed by “big bad oil”. He can masquerade as Robin Hood coming to the rescue of the exploited masses by “robbing from the rich and giving to the poor!” At least the “robbing” part is correct!

     In 2005, thirty years after the shock of the first Arab oil embargo, we still had an energy problem. The message was clear. Even after 30 years of foreign energy dependence, we were still facing an energy crisis but we were failing to produce a realistic energy policy. There was no leadership at the federal level to address the problem. Our politicians paid lip service to solving the problem but they were more interested in pandering to parochial constituencies than in providing the leadership needed to work our way out of this dilemma.

2015 Update
A few Facts

     Some facts related to America’s energy status in 2015 are as follows:

     “93 percent of the new power infrastructure that has been built since 2000 went to support {either} ‘natural gas … or renewable energy projects.’
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     “Coal{‘s} market share {is} around 39 percent . . . ‘structural’ trends – especially the retirement of coal plants – are underway that will probably lead to long-term increased market share for natural gas.
     “. . . Since 2005, gasoline consumption has dropped 8.6 percent.
     “Natural gas production is up 25 percent, bolstered by improvements in technology and a surging demand.
     “U.S. shale drilling is also up — 41 percent since 2007 — due to developments in new technology.
     “Crude oil production in the U.S. has shot up 41 percent since 2007. . .” (Ref. 10)

What’s Changed in the Last Decade

     It’s now 10 years after I first wrote about America’s energy dilemma. Let’s see what progress we’ve made in the intervening decade.

Nuclear Energy

     Since 2005, the American nuclear industry has made some progress. Today, in 2015, “the USA is the world's largest producer of nuclear power, accounting for more than 30% of worldwide nuclear generation of electricity.
     “The country's 100 nuclear reactors produced . . . over 19% of total electrical output {in 2014}. There are now 99 units operable . . . and five under construction.
     “Following a 30-year period in which few new reactors were built, it is expected that six new units may come on line by 2020 . . .
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     “Government policy changes since the late 1990s have helped pave the way for {this} significant growth in nuclear capacity. . . (Ref. 11)

     In 2013, U.S. electricity generation was 40% from coal-fired plants, 27% from gas, 19% nuclear, and the rest (14%) from a combination of hydro-electric, wind, solar and geothermal generation.[11]

     “Despite a near halt in new construction of more than 30 years, US reliance on nuclear power has grown. In 1980, nuclear plants produced . . . 11% of the country's electricity generation. In 2008, that output had risen to . . . nearly 20% of electricity, providing more than 30% of the electricity generated from nuclear power worldwide. Much of the increase came from the 47 reactors, all approved for construction before 1977, that came on line in the late 1970s and 1980s, more than doubling US nuclear generation capacity. The US nuclear industry has also achieved remarkable gains in power plant utilization through improved refueling, maintenance and safety systems at existing plants.
     “While there are plans for a number of new reactors . . . , no more than four new units will come on line by 2020. Since about 2010 the prospect of low natural gas prices continuing for several years has dampened plans for new nuclear capacity.
     “. . . nuclear plants generate nearly 20% of the nation’s electricity overall and 63% of its carbon-free electricity [Emphasis mine] . . .
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     “Operationally, from the 1970s the US nuclear industry dramatically improved its safety and operational performance, and by the turn of the century it was among world leaders, with average net capacity factor over 90% and all safety indicators exceeding targets.
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     “In June 2014 the US Environmental Protection Agency (EPA) announced that it would use its authority under the Clean Air Act to require a reduction in carbon emissions from US power plants of 25% below 2005 levels by 2020, and a 30% reduction by 2030 . . . Nuclear plants are already the main carbon-free generation source for over half of US states [Emphasis mine] . . . It is becoming accepted that the 30% reduction by 2030 will be impossible without at least the present level of nuclear contribution.
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     “A significant achievement of the US nuclear power industry over the last 20 years has been the increase in operating efficiency with improved maintenance. This has resulted in greatly increased capacity factor (output proportion of their nominal full-power capacity), which has gone from 56.3% in 1980 and 66% in 1990 to 91.1% in 2008. A major component of this is the length of refueling outage, which in 1990 averaged 107 days but dropped to 40 days by 2000. {Refueling outage} is now 15 days. . . .
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     “Today the importance of nuclear power in USA is geopolitical as much as economic, reducing dependency on imported oil and gas. The operational cost of nuclear power in existing plants is very competitive with alternatives. . . .” (Ref. 11)

Green Energy

     Green energy is another name for renewable sources of energy, i.e., solar energy and wind powered energy. Green energy zealots want to put an end to energy derived from non-renewable energy sources, i.e., coal, oil and gas, and replace them with energy derived from renewable energy sources. Unfortunately, this goal has so far proved to be unobtainable. The reasons are threefold – technological, economic and availability. To date, the technology for the development of renewable energy sources has been unable to provide energy at a price that is competitive with energy from non-renewable sources and has been unable to provide energy 24/7, i.e., 24 hours a day, 7 days a week. Non-renewable sources of energy are still too expensive and unreliable to compete in the market with oil and gas and therefore, must be subsidized. Advocates of energy independence repeat the mistakes of the 1970s early ‘80s, during which time the government attempted to micromanage the energy market and pick winners and losers. Today that means supplying subsidies to “green” technologies e.g., Solyndra. The results weren’t very good then and there is no reason to believe that the outcome will be different today. Too many supporters of green energy have never learned that the reason such energy sources need subsidies in the first place is that these energy sources have serious economic and technological shortcomings.

     “Despite millions in subsidies and government loans, solar power is projected to remain a tiny portion of overall electricity generation in the U.S., according to Energy Department figures.
     “Utility-scale solar power generation is projected to increase in 2015, but it will still make up only 0.6 percent of total U.S. electricity generation, [Emphasis mine] according to the Energy Information Administration. Utility-scale solar has more than doubled in 2013 and EIA expects solar capacity will nearly double again in 2015.
     “Federal, state and local subsidy regimes and green energy mandates have helped the solar industry grow in the last few years. . . .” (Ref. 12) but, in 2015, solar energy generation is still a very small component of energy generation in the U.S.

     Mandating that all residential housing and some commercial buildings have some form of solar energy generation would help to reduce the rate of consumption of non-renewable sources of energy. Until very recently, Israel had no domestic sources of non-renewable energy. To combat this problem, the price of vehicle fuel was kept very high which encouraged the use of public transportation, bicycles, motorcycles and a limited amount of driving in private vehicles. Also, several years back, Israel passed a law mandating that nearly all buildings in Israel had to have solar water heaters of the roofs of these buildings – the technology for electrical power generation from solar cells was not adequately developed when the law was passed. To this day, nearly all houses in Israel have solar water heaters on their roofs, which helped to ease its energy shortage. There is no reason why a similar mandate could not be imposed in the United States. Today, both roof-top solar water heaters and solar panels to generate electrical power are technologically and economically feasible in many parts of the country.

     Significant progress has been made in non-hydroelectric renewable energy – wind, solar, biomass, and other – over the past few years, going from 2.5% of electrical energy production in 2007 to almost 7% in 2014. But it is still well under 10% of overall electrical energy production today.[13] The inescapable truth is that renewable energy will remain the main source of electrical energy in the United States for the foreseeable future.

Fracking

     At least for now, private oil and gas exploration companies have eliminated America’s previous dependence on foreign oil and foreign LNG for a significant portion of its energy needs. This has been accomplished through the technological breakthrough of hydraulic fracturing of the shale formations in which oil and gas are trapped - commonly referred to as “fracking”. Because of the fracking revolution, the U.S. has now become the world’s largest producer of natural gas and natural gas prices in the U.S. prices are a fraction of what they were a decade ago.

     The natural gas that is obtained from fracking has other benefits besides reducing America’s dependence upon foreign sources of oil and petroleum. The ability to extract gas from shale by fracking has resulted in reduced natural gas prices and allowed electric utilities, particularly in New England, to use more natural gas in place of coal and oil. When gas is used in place of coal to generate electricity, it produces half the carbon emissions and almost none of the particulate matter that coal does.

Government, NIMBY and Other Obstructions

     As previously noted, The Nantucket wind power project in federally controlled water continues to face opposition from the NIMBY crowd because of fears it would ruin their ocean view from the shore. Similarly, when it was suggested that an LNG terminal could be sited on an unused island outside of Boston’s inner harbor, the NIMBYs raised a hue and cry before any serious consideration of the pro’s and con’s had even started. Fall River’s mayor has promised to inflict a “thousand paper cuts” upon those audacious enough to suggest an LNG terminal for his city - meaning that he will produce an endless succession of court challenges in order to delay and increase the costs of the building of an LNG terminal.

     For many years now, America has been held hostage to environmentalists who have lobbied hard (and usually quite successfully) for their concept of what the world’s environment should be. These environmental extremists have been able to slow, limit and, in some cases, totally stop the search for new energy sources, the extraction of fossil fuels in environmentally sensitive locales, and the generation of power from plants that they consider “not clean enough”.

     In 2005, the need for additional LNG terminals was recognized. The fracking revolution had not yet occurred and there was an inadequate supply of domestic natural gas. After hurricanes Katrina and Rita had devastated the Gulf Coast where most of the U.S refining capacity was located and which had caused a significant interruption in refinery output, it was realized that there was a need to also consider the security and diversity of the facilities that delivered oil and gas to our homes and businesses.

     During the three previous years, the federal government had approved 10 new LNG terminals, all but one in the Gulf of Mexico between New Orleans and Corpus Christi, where Katrina and Rita had caused so much damage. The single terminal approved outside the Gulf was proposed for Fall River, Massachusetts, where we have already seen the monkey wrench thrown into the works by environmental do-gooders and the local NIMBY opponents.

     The Fall River project was subjected to the most intensive review of any energy project ever carried out by the federal government’s safety and security agencies and was found to be both in the public interest and capable of safe and secure operations.

     Still, many elected officials opposed this project, as they did other energy projects – the wind farm in Nantucket Sound for example. While expressing outrage at the high cost of energy and demanding solutions, much of the political leadership surrendered to the demands of the environmental gestapo and opposed viable proposals that could bring new energy sources into service in a reasonable time frame. Doing nothing and opposing almost everything by these environmentalists and the politicians doing their bidding was and is a decision that harms every citizen and business by increasing energy costs and reducing economic competitiveness.

     The U.S. government, state and local governments, environmental zealots, NIMBY obstructionists, and others have hindered, blocked and otherwise delayed and prevented the implementation of an effective and integrated United States energy program.

     Here in Massachusetts, some of the NIMBYs, environmentalists and others are blocking the construction of a much needed gas pipe line to bring natural gas from Pennsylvania to the Bay State. Many consumers in New England have seen major increases in their winter energy bills which isn’t caused by a shortage of natural gas - it’s caused by a lack of pipeline capacity to get more gas to users when the demand surges during very cold time periods, such as has occurred in the winter of 2015.

     But, opposition to adding a gas transmission pipeline from New York into Massachusetts is making the addition of the badly needed additional capacity difficult. To avoid having to go to court with NIMBY and environmental obstructionists in Massachusetts, the proposed route of the pipeline was moved from northern Massachusetts into southern New Hampshire. But opponents in New Hampshire are arguing against it being built there saying that it’s a Massachusetts problem and, quite logically, if they want a pipeline to bring more natural gas to Massachusetts, then let them build the pipeline there.

     As with just about anything that might change the way in which God created the original world, the environmental police are complaining about fracking. If something didn’t exist in the Garden of Eden, then it must be evil, especially if man had a hand in making or changing it. The concerns over fracking seem to almost entirely rest on misconceptions and fallacies, such as drinking water contamination. Fracking is a well understood and safe process. It has been in use over many years and the process is already highly regulated. Fracking requires less land and taxpayer subsidies than renewable energy technologies do.

     The proposed TransCanada Keystone XL Pipeline would allow the United States to access safe, reliable, and affordable energy supplies from Canada, and reduce our need to import crude oil from less stable countries and regions of the world. Canada has asked the United States to allow the construction of this pipeline to carry oil from its Alberta province through the United States to a U.S. refinery on the Gulf of Mexico. Providing a pipeline to bring Canadian crude oil to a U.S Gulf Coast refinery would seem to be a no-brainer. It would: 1) provide a reliable supply of crude oil from a friendly nation, 2) create thousands of jobs for American workers, 3) support a friendly neighbor, and, 4) reduce our need to import oil from unfriendly nations like Iran and Venezuela.

     But for the past several years, President Obama and his Democratic cohorts have blocked passage of the Keystone project, succumbing to heavy pressure from environmental groups. The Obama administration, along with Democrats in congress, have given in to these environmental activist groups and strangled the project.

     The Obama administration has surrendered to the environmentalists, who fail to recognize that all aspects human life involve trade-offs, and to the green energy crony capitalists who are profiting at the expense of American taxpayers and consumers. The influences of these groups are the major obstacles to the U.S. attaining its objective of energy security and energy independence.

Impact on Foreign Relations

     Not only does the improvement in America’s energy situation affect us domestically, but this rapid and radical change over the past decade provides the United States with previously unavailable opportunities for impacting American foreign policy. “Thanks to the boom in American unconventional oil and gas production, the United States is swapping its long-suffered vulnerability to imported energy in favor of a new strategic asset. Even if the technology behind this energy renaissance remains limited to the American space, its geopolitical consequences will go beyond American shores. U.S. adversaries and allies will be affected in different – and often unanticipated ways – given the variety of mechanisms through which American energy prowess will affect global energy markets and politics. Despite numerous uncertainties surrounding the trajectory of global energy, America’s chance to capitalize on its new energy prowess offers significant new opportunities in the geopolitical realm.
     “. . . In less than a decade, the combined technologies of hydraulic fracturing and horizontal drilling have unlocked vast American resources that were, for decades or longer, considered by the energy industry uneconomical to extract. Despite declining production of conventional gas in the United States, overall natural gas production has increased significantly with the advent of shale. Representing only 1.6% of total U.S. gas production in 2000, shale gas constituted 40% of overall production in 2012; [Emphasis mine] some expect this percentage to reach 53% by 2040. New flows of light, tight oil released by fracking have similarly reversed earlier declines in U.S. oil production. In the past five years {2007 to 2012}, incremental U.S. oil production alone has totaled 2.4 million barrels a day, nearly the amount that Kuwait and the UAE each produce. [Emphasis mine]
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     “The economic benefits of this newfound energy prowess {have already been apparent.} {I}n the United States, {this} boom added $283 billion – or 1.7% of GDP – in 2012 and . . . more energy-driven growth could amount to twice that sum in the years to come. The same report estimates that 2.1 million jobs are supported by unconventional oil and natural gas {extraction} in the United States alone.” (Ref. 14)

     When the United States became a net importer of energy in 1957 and a net importer of oil in 1971, the United States was held captive to its dependence on foreign oil and gas to meet its energy needs. Such is no longer the case.

     Not only does the United States stand to benefit from the unconventional extraction oil and natural gas in the U.S., but so will others. China stands to benefit from this unconventional boom. As the world’s largest importer of oil and largest consumer of energy overall, China will benefit from the downward pressure on oil and gas prices that the added U.S. supply will have. For China, cheaper, more accessible energy is a political imperative.

     To maximize its ability to use its newly gained energy prowess to its geopolitical advantage, the United States should consider the following policy actions recommended in Reference 14.

Lift current restrictions on the export of most U.S. crude oil.
Expedite the approval process for U.S. LNG projects, which is currently laborious and expensive.
Replace the oil-for-security compact between the United States and Saudi Arabia with a new basis of partnership. Gulf powers are convinced that the United States is withdrawing from the region on account of its enhanced domestic energy position. This perception is important to address if the United States is to maintain leverage and influence in the region. Rather than focusing on perpetuating the oil-for-security compact, the United States should look for more constructive ways to demonstrate its commitment to stability in the Gulf and to create new modes of American leverage in the region.
Re-prioritize the U.S. relationships with Canada and Mexico. Despite the rhetoric of many U.S. presidents, Canada and Mexico have not attracted the time, attention, and political capital their standings warrant from American policymakers. Lifting the ban on crude exports, for instance, will help both Canada and Mexico, which are frustrated by unintended consequences of this policy. Approving and building infrastructure to transport energy across borders will be important, for both Canada and Mexico.
Put the production of American unconventional resources on more stable footing. If the U.S. unconventional boom is challenged by an environmental calamity or proves to be unsustainable for other reasons, none of the geopolitical benefits to America will be realized. For this and other reasons, federal and state policymakers need to work together to ensure the right set of regulations and incentives are in place to promote the industry and future technological advances, to increase public confidence in fracking, and to protect the environment.

     What the Government Should Be Doing

     The unfortunate truth is that essentially all the gains made by America in reducing its dependence on foreign oil and gas and in reaching energy independence have been achieved through the efforts and investments of private industry. This has been achieved in spite of, and not because of, the actions taken by our government.

     The Obama administration is continuing to prevent the exploitation of vast energy resources on federal lands, e.g., the continental shelves, and the Arctic. The vast increase in domestic energy production has occurred in spite of the policies of President Obama. It has happened mainly because it took place on lands not subject to federal regulation.

     The continuing threat to American energy security results from inconsistent government policies, frequent changes in taxes and incentives for exploration, and repeated changes in environmental policies that limit the exploration, production, and transportation of oil and gas.

     Today, the United States has been able to maximize energy security by private investment in the energy sector, by the market pricing of, and competition among various sources of energy, by maximizing consumer choices in appliances and vehicles, and by applying reasonable economic and environmental regulations.

     Once again, capitalism has demonstrated its superiority over socialism and the concept of government-managed economies.

     What should our government be doing to foster the continuation of this explosive growth in American energy security? Primarily, it should follow the concept of “First, do no harm!” Then, our government should follow prudent policies that balance exploration, production, transportation and consumption of energy against reasonable environmental regulations.

     Here in 2015, offshore exploration and drilling is essentially completely prohibited by the U.S government, as is searching for oil and gas on public land. This must end! Exploration for sources of oil and gas on public lands and in federally controlled offshore waters, under tight environmental control should be allowed and encouraged by our government. As an absolute minimum, we should determine what resources are out there and where they are located. The decision to proceed with the extraction of these resources can be deferred to a later date.

     To a large extent, the government should leave the selection of winners and losers in the energy field to the marketplace. Attempts by governments, here and elsewhere, to decide what technology is best or which private enterprises will provide the goods and services best suited to the needs of the nation have, by and large, proven to be failures compared with the capitalist method of selecting winners. Encouraging entities to develop and market energy efficient products, find and exploit less-expensive and environmentally-friendly new sources of energy, and to build the infrastructure to bring this energy to market is one thing that the government should be doing. Standing in the way of companies trying to do all of the above is counter-productive and must end. Political grand-standing to take advantage of public fears and misconception is abhorrent and needs to be condemned. As 2015 move toward its mid-point, we cannot claim that our government is following these concepts.

     Our government needs to define a comprehensive energy policy and then avoid making inconsistent changes over time. American Industry and business want to have a fixed target at which to shoot and a level playing field on which to compete. They also need unbiased referees – in this case, the government and its regulatory processes. This policy is non-existent in the year 2015.

     The government and its politicians must cease pandering to the environment and green energy lobbies. Ecological concerns must always be considered and encouragement of renewable energy sources are important, but cannot always top all other considerations. The energy policy of the United States must be a balanced policy in which ecology and renewable energy concerns are taken into consideration, but alongside other factors, such as defense needs, economic concerns, and so forth. Such is not the case in 2015.

     In 2015, Congress has finally approved the Keystone XL pipeline. President Obama has vetoed it. Either President Obama must reverse himself or the next president must approve the project. Pipeline siting, along with the approvals of LNG terminals must not be held captive to the whims and prejudices of the few – the environment gestapo and the green energy extremists. Siting requests must be expeditiously reviewed and approved without the interminable appeal and review process that can take decades to proceed through the judicial review process. Politicians need to keep the concerns and the needs of the country as a whole in mind rather than the parochial concerns of a few of their most vocal constituents.

     The push for energy conservation must continue and should realistically be increased. In 2015, there is still too much energy being wasted. One step in the right direction was taken by the government when mandates for vehicle fuel-efficiency were updated and increased. Although opposed by some, mandating the phase-out of incandescent light bulbs was another step in the right direction. Economics can be a powerful tool in this effort. Making energy too expensive to waste will drive people, companies, and the government to minimize their wasteful uses of this resource. Israel has shown that this approach to energy (and water) conservation works. Taxing energy consumption would be one effective method of doing this. Tax credits that foster energy conservation in homes, factories and large buildings have had an effect and need to be continued or expanded.

     The mandate for improving gasoline mileage on new cars will help to conserve petroleum reserves. Another step that requires political will but which will have significant impact in slowing the rate of consumption of non-renewable petroleum reserves would be for the government to increase the federal tax on gasoline. The benefits from such a move are numerous. To be effective, the tax increase should drive the price of gasoline into the $5 to $7 range. This tax increase would accomplish the following:

Encourage consumers to purchase vehicles with high gas mileage.
Encourage drivers to practice more fuel-efficient driving.
Encourage consumers to get rid of fuel-inefficient vehicles.
Encourage vehicle manufacturers to produce gas-powered vehicles with improved gas mileage.
Make alternative fueled vehicles more price competitive. This would result in the further development and production of electric, gasoline-electric hybrid, hydrogen powered, fuel-cell powered, natural gas powered, and potentially other alternative energy powered vehicles. Time and time again, capitalistic economics and competition have proven to be the mother of invention and the savior of supposedly hopeless causes. It is amazing what good old fashioned Yankee ingenuity can accomplish when driven by free enterprise, the incentive motive, and the absence of government interference.
The increased tax revenue would be available to maintain and improve the highway and bridge infrastructure in this country.
The increased tax revenue would be available to develop more energy efficient road and traffic control systems.
The increased tax revenue would be available to develop new, and improve existing, energy-saving mass transit systems.

     The federal and state governments should make all toll roads and toll bridges toll-booth-free and switch to automatic billing of users without the need for vehicles to stop or slow down at toll monitoring sites. In addition to eliminating the need to stop and pay tolls which unnecessarily consumes fuel, such a move would eliminate the need for toll takers and the cost of their associated benefits - sick leave, vacation, retirement pension, etc. It would eliminate the costs associated with toll collection - toll machines, toll booths, transponders, maintenance, etc. It would speed up the flow of traffic and eliminate the all-too-frequent toll booth accidents. It would also reduce air pollution caused by the stop-and-go and traffic backups at toll booths.

     The government should eliminate High Occupancy Vehicle (HOV) lanes on highways. The theory behind HOV lanes was valid during the Arab oil embargo of the 1970s when there was a shortage of gasoline. With gasoline in short supply at any price, it made sense then to car-pool. Today, there is no gasoline shortage and HOV lanes do not, in and of themselves, encourage car-pooling or ride-sharing. In fact, today there is no valid reason for HOV lanes and there are several reasons to get rid of them. I challenge anyone to name one person who leaves their car at home in order to be able to ride in a “high speed” lane. There is a valid reason why the number of automobile occupants required for HOV use has been reduced to 2. The reason is that people don’t join commuter pools simply to ride in the HOV lane.

     The reasons to do away with HOV lanes are:

During commuter rush hours, HOV lanes are unavailable to the majority of commuters, resulting in fewer lanes to carry the increased commuter traffic. This causes commuters to crawl along in rush hour traffic, burning additional fuel and slowing down their commutes to work or to home while HOV lanes are virtually empty.
When breakdowns occur in HOV lanes, traffic in the HOV lanes must come to a halt since there may be no way to exit the HOV lanes, again resulting in additional fuel consumption and more delays for HOV lane drivers.
When breakdowns occur in non-HOV lanes, traffic must slow down or halt in these lanes, since there is no way to use the HOV lanes, again resulting in additional fuel consumption and more delays.