This week (June 26, 2017) the Trump administration hosted “Energy Week”.
During the week, President Trump and his team unveiled a strategy that focuses on aggressive fossil fuel development and a revitalization of nuclear energy with the overall goal of US Energy Dominance. To me this is a 20th century vision/strategy that is not sufficient for today and the future. No doubt fossil fuel is the dominant energy supply today and will continue for some time. The US needs to be a player in that supply for both its own security and that of world economy. But there are significant deficiencies in the strategy. Energy dominance may make for a good catchphrase for Trump’s voter base, however, it ignores the fundamentals of energy supply and markets.
In this blog, I provide background on the discussion of US Energy Domination followed by a summary and discussion of my views on all of this. Sorry for the long blog, but it turns out there are a lot of elements when one is discussing world domination.
The key theme for Energy Week is “… how we can pave the path forward toward energy dominance”. And how “… the United States [story] is about becoming an energy exporter and no longer about peak resources or being beholden to foreign powers”.
The quotes above are from an editorial in the Washington times written by Rick Perry (Energy Secretary), Ryan Zinke (Interior Secretary) and Scott Pruitt (EPA Administrator)
http://www.washingtontimes.com/news/2017/jun/26/us-energy-dominance-is-achievable/
The editorial goes on to say that Mr. Trump wants to more fully develop our abundant domestic energy sources for good, both at home and abroad and make our nation self-reliant. Furthermore, an energy dominant America will export to markets around the world increasing our global leadership and influence.
Also mentioned in editorial is how the US leadership in clean and renewable energy including clean coal, nuclear and renewables will be an important part of this strategy.
Adding to this are comments directly from President Trump in a speech at the Energy Department on June 29, 2017.
http://insider.foxnews.com/2017/06/29/president-trump-energy-department-gas-speech
President Trump said that the administration’s energy policy will “unlock millions and millions in jobs and trillions of dollars in wealth.” [editorial comment here: I would really like to see the basis for this level of job creation.]
He announced 6 new initiatives to propel the US forward in energy dominance:
- Revival and Expansion of Nuclear Energy Sector
- Address barriers to supply of US coal to overseas power plants
- Approve a new petroleum pipeline to Mexico
- Sale of more natural gas to South Korea
- Approval of two long term applications to export LNG from Lake Charles terminal
- Creating a new off-shore oil and gas program to allow companies to access oil and gas off our shores.
Plus he reiterated Executive Orders already initiated to approve pipelines and reduce regulations on fossil fuel burning and extraction.
On the other side of this issue, many see issues with the feasibility of energy dominance by the United States. Slate points out that US total energy production is about 15% of world energy demand. Even in a high oil and gas scenario, the percent is expected to decline in the future as world energy demand continues to grow.
http://www.slate.com/articles/health_and_science/science/2017/06/america_is_never_going_to_dominate_the_energy_market.html
This same article points out that it is likely that at some time in the future, perhaps as early as 2020, the US could be a net exporter of fossil fuels. That would certainly be of benefit to the US balance of trade payments. But it would not ensure dominance.
A CNBC article questions whether “dominance” is a really a possible.
http://www.cnbc.com/2017/06/28/trump-america-energy-dominant-policy.html
The term “energy dominance” falls flat in two regards, said Jonathan Elkind, former assistant secretary for international affairs at the Department of Energy under Obama.
First, for the U.S. energy sector to thrive, the government needs to invest in new technologies, and Trump’s proposed budget slashes the Department of Energy’s budget for research and development, he said.
“Second, the very people around the globe whom we want to have as our customers — the would-be purchasers of U.S. energy goods and services — do not seek to be ‘dominated.’ Instead, they are looking for our partnership,” said Elkind, now a senior research scholar at Columbia’s Center on Global Energy Policy.
“This new framing of energy policy around the idea of dominance is a thinly-veiled attempt to justify unfettered development of fossil fuels and rollbacks of environmental protections,” said David Konisky, associate professor at Indiana University’s School of Public and Environmental Affairs.
Here are my thoughts on the subject.
First, the Trump Administration needs to drop the pretense that a significant driver of energy domination is to do good. In the end, the oil and natural gas (and coal to a somewhat lesser extent) are global market driven, fungible commodities. Generally, supply and demand drive pricing and availability and to the extent the US sends (or withdraws) supply from one country, the rest of the market will ultimately balance it out. The influence by one player will be limited.
That is not to say, that you can’t use fossil fuels as political weapons. Russia has done this on many occasions in Eastern Europe with threats of supply disruptions if political demands are not met. The oil embargoes in the 70’s is another example. Personally, I don’t believe that the major oil companies or stock holders on Wall Street are very interested in using oil that is under their control for political influence if it will negatively impact profits or market share.
Even President Trump has acknowledged the US is not always an influencer of good. See the attached article where he is quoted about the $6 trillion the US spent in the Middle East and “we got nothing”. But he is still holding out for another opportunity: “If we kept the oil, you probably wouldn’t have ISIS, because that’s where they made their money in the first place, so we should have kept the oil,” Trump said. “But, okay, maybe we’ll have another chance.” I don’t know if he means military intervention or something else. But I doubt it will be good for the region.
http://thehill.com/homenews/administration/318681-trump-we-spent-6t-in-middle-east-and-didnt-even-get-a-tiny-oil-well
This Middle East mess developed under both Republican and Democratic administrations. In fact, US influence goes back to after World War 1 and how the Ottoman empire was in appropriately dissolved. While Americans would like to think our influence is more benevolent than other dominant energy players in the world, our history does not always bear this out. The US does do great good in the world. Our generosity in times of disaster is un-paralleled. The democratic world relies heavily on our leadership. However, Eisenhower warned us to be wary of the influence of the military industrial complex and its influence on government.
For example see the following article about our influence in the regime change in Iran in 1953.
https://www.washingtonpost.com/news/worldviews/wp/2017/07/11/the-trump-administration-should-read-its-own-documents-about-regime-change-in-iran/
Where the “good” part can come in, is the improved stability of the fossil fuel markets by US capability to act as a flywheel to respond as the demand rises and falls. Fracking has proved to be quite adaptable to changes in pricing. This means that poorer countries that need to import fossil fuel energy or feedstocks have cheaper and more secure supplies. This could mean the difference between life and death in some regions of the world. Stability of energy markets (and markets in general) tends to be a good thing.
Lower fuel prices, as indicated in the Washington Times editorial can also be beneficial to US consumers and businesses as well. But since US producers can sell into the world market, the rest of the world will also be beneficiaries of the lower price.
Here is where “dominance” is likely: The more fossil fuel development in the US, the more dominant the fossil fuel industry will be in political power at the Federal and local level.
I have always been a proponent of energy diversity. I have seen too many ups and downs over the years in the energy industry due to lack of diversity and lack of robustness in our energy infrastructure and supply. An over reliance on fossil fuels is not diversity. Solar, wind and other renewable technologies need to have a strong presence. Energy efficiency also needs to have a significant role in the overall strategy.
In the above-mentioned Washington Times editorial, it mentions clean coal and nuclear as additional technologies to reduce emissions and contribute to energy dominance (and diversity). Neither of these technologies have any possibility of being implemented (or increased in the case of nuclear) any time soon, if at all. The clean coal plant at the Petra Nova facility in Texas is a case in point. The low price of coal due to fracking, plus Trump’s dismissal of the Clean Power Act will make this technology only marginally economic where it can be combined with enhanced oil recovery. It will be uneconomic elsewhere. At this plant, this technology only captures 10% of the CO2 emissions at a cost of $1 billion. It has not demonstrated an economic and robust solution to CO2 emissions from coal.
https://www.forbes.com/sites/christopherhelman/2017/01/11/nrg-energy-ceo-carbon-capture-is-very-challenging-at-50-oil/#11a44b715b22
There is simply too much resistance to nuclear at this point. Fukushima was the last nail in the coffin. No clear path to long term storage of nuclear waste is another nuclear deal killer. With cheap natural gas and coal, nuclear plants cannot economically compete. Is Trump willing to commit government funds to subsidize nuclear plants to make them economically competitive?
A significant increase in solar and wind power, coupled with advanced battery storage can not only improve diversity of supply, but is a local source that is not subject to the political influences of other fossil producing nations that Trump is so concerned about. The fact that the Washington Times editorial did not even mention wind and solar was disheartening, though not unexpected. See the link below on the efforts by the Trump Administration to weaken renewable energy (and clean coal).
https://www.washingtonpost.com/news/energy-environment/wp/2017/05/18/trumps-budget-expected-to-massively-slash-research-on-renewable-energy-and-clean-coal/?utm_term=.aeabb9061e23
Furthermore, there was no discussion about energy efficiency. This can even be a more effective way to prevent impact from energy supply and prices. You can’t be impacted by energy you don’t use. Fuel economy standards have caused significant reductions in oil usage.
http://www.ucsusa.org/clean-vehicles/fuel-efficiency/fuel-economy-basics.html#.WVVzZbpFyuU
The bottom line is I believe energy diversity is a good thing. I would much prefer the term “energy stability” over “energy dominance”. The world will rely on fossil fuels for a long time. The US needs to be a robust supplier of fossil fuels to ensure domestic and world security. But our energy policies need to be economically and environmentally sound. Renewables need to be front and center in the discussion of energy security. The additional benefits of renewables, besides the significant environmental benefits, are the job creation opportunities. Technology advancements in solar are continuing. Those that are on the forefront of technology advancement reap the rewards. Below is just one example where the technology is still changing.
http://mashable.com/2017/05/19/printed-solar-solution-australia/#faynm3dwVqqK
For the US to be globally competitive, we cannot let other countries get ahead of us in energy technology.
policonergy - the nexus of politics, economics and energy 