The New, Old World of U.S. Oil Policy

Yesterday, the New America Foundation hosted a televised summit to discuss the enormous changes taking place in U.S. oil production and what it might mean for national politics and the presidential election, the economy, and energy security. Steve LeVine and his colleagues deserve a lot of credit for putting together a top-notch panel and thought-provoking discussion. For anyone looking to get a handle on the big issues raised by the American oil and natural gas boom, I can’t think of a better place to start than watching the discussion here.

Events like this one provide an interesting gauge of where people’s heads are—a window into what they perceive to be the big new problems, opportunities, and uncertainties. For me, the discussion was a reminder of how radically different the “it” questions are in the hydrocarbon world are now versus a few years ago. Questions about U.S. energy policy that haven’t been asked since the 1970s are back in vogue. And some of the most urgent questions of 2007-8 oil-price boom are now obsolete, at least for the time being.

The New America Foundation’s introduction to the discussion captured the spirit of this new landscape:

Less than a year ago, industry experts were warning of a world of oil scarcity and the prospect of resource war among nations fighting for their share of a short global supply. Now, new projections have energy analysts heralding a future of cheap, abundant oil, with the possibility of energy independence for North America. If the new narrative turns out to be true, it could have a profound effect on the feasibility of alternative energy and how we view climate change; it could also fundamentally reshape the geopolitical landscape. Are the projections valid, or the product of aspiration? If we have entered a new golden age of fossil fuels, how will it influence politics at home and abroad?

The last several years have proven the possibility of a reversal of long-term conditions in the U.S. energy world that once appeared unlikely ever to change. The list is long: the continual decline in U.S. oil production outside Alaska, rising domestic dependence on imported crude oil, and the status of the United States a net importer of petroleum products, not to mention the country’s increasing net natural gas imports as a percentage of consumption.

Given these historic changes, energy analysts are rightly interested in pausing to ask sweeping questions about what could be next—even if, as yet, they remain possibilities on the horizon.

One audience member, for example, asks whether EIA forecasts imply that the United States might, in the not-distant future, once again hold spare oil production capacity, and if so, how it should manage it. It’s an interesting question. But can you imagine it being asked in a similar setting three years ago? It would have met only puzzled looks and blank stares. Now, although it’s still far from an urgent issue, it’s not unworthy of consideration in this type of a forum.

Similarly, if this panel had been held in 2005, you can imagine a decent amount of time going to discussing whether world oil production would very soon—or already had—hit an irreversible peak. That question, rightly, got little serious attention in the discussion. What is more, you can bet that in 2005 the discussion would not have turned, as it did in the first panel, to the merits of positing 2020 versus 2035 as a time horizon for U.S. oil self-sufficiency. How times change.