There has been a tremendous change in the energy outlook of the United States in just the last few years. U.S. dependence on foreign oil peaked in 2005 and declined dramatically since then, according to the Energy Information Administration. In fact, last year U.S. dependence on foreign oil fell below 50 percent for the first time since 1997. The reason: domestic demand is down and domestic supply is up.
The U.S. economic recession contributed to declining domestic demand, but so too has an increased focus on efficiency by both consumers and industry. Highway transportation energy consumption for light-duty vehicles spiked in 2004 and has declined 4.5 percent since despite a growing population. Recent federal mandates for increased fuel efficiency for both cars and trucks will continue the trend towards lower overall consumption. Some have even forecast that the U.S. will never again consume as much gasoline as it did in 2007, its peak year.
One the supply side, the horizontal drilling and hydraulic fracture stimulation technologies allow extraction of petroleum and natural gas from shale formations and other unconventional sources. The National Petroleum Council recently issued a study that was conducted at the request of U.S Secretary of Energy Dr. Steven Chu. The study concludes that potential supply of both natural gas and oil in North America are proving to be much larger than previously thought. The Department of Energy more than doubled its estimate of recoverable U.S. shale reserves in the Annual Energy Outlook 2011 from just last year. Indeed, natural gas is so plentiful and inexpensive in parts of North America that it is, once again, being flared because the cost of capturing and transporting it is more than the price it will garner.
In addition, terminals for importing liquid natural gas—some completed just a few years ago—are being converted into terminals for exporting liquid natural gas. A giant pipeline that was used to bring oil into the refineries and distribution point in Cushing, OK is reversing the flow to send oil pumped in North America to refineries on the Gulf Coast.
In a recent Financial Times article, Ed Crooks wrote, “Many analysts expect that in the coming decade the U.S. will leapfrog Saudi Arabia and Russia to become the world’s largest producer of liquid hydrocarbons, counting both crude oil and lighter natural gas liquids such as propane and ethane.”
While some will see the U.S. energy boom as good news—it means more energy security, lower energy costs and an improved balance of payments for the U.S. and countries aligned politically and economically—others will view it with alarm—as an increased supply of petroleum and natural gas will likely mean that more carbon dioxide is emitted into the atmosphere.
Everyone can agree, however, that improving energy efficiency helps in all respects—extending petroleum supply while reducing carbon dioxide emissions. But high-cost technologies—electric and fuel cell vehicles come to mind—may not be economically sustainable if fuel prices remain around where they are today. That is why the clean, efficient, lower-cost engine Achates Power is developing will benefit consumers and vehicle manufacturers in times of energy booms and busts.