The United States is set to become the world’s number one producer of oil and gas combined. But since the oil crises of the 1970s, U.S. energy policy has been based, either implicitly or explicitly, on the assumption of scarcity of U.S. resources. This has resulted in strong support for open and transparent global energy markets, which are expected to reduce volatile (and high) prices for U.S. customers and enable U.S. companies to access foreign energy supplies.
What policy makers now have to reckon with is what the re-discovery of a bounty of domestic supplies (of oil and gas) means for U.S. energy policy, at home as well as abroad.
Our goal for oil policy should be stability. Oil markets are global and, despite huge increases in oil production, the U.S. remains a price taker. Cleaving to a doctrine that emphasizes free markets might suggest the U.S. should also allow crude exports; but with various forecasts suggesting an oil market glut in the medium term this could lead to large-scale instability in global markets.
In the case of natural gas, should we be aiming for a specific goal, one that differs from stability? The jury is out, but with the U.S. entirely self-sufficient in natural gas for the foreseeable future, and in the absence of a truly global market for gas, a strong case could be made to use export and foreign policy to create more of a competitive, global market. This could be done by sending U.S. gas abroad; by encouraging greater natural gas production through the creation of transparent regulatory regimes in countries where reserves are held or being discovered; and by moving global energy consumption towards gas, and away from more environmentally damaging fuels.
Should we aim for leverage or stability in oil and gas markets, a mixture of both, or something different when it comes to energy and foreign policy? What steps should be taken to achieve these policy goals?
Great question Robert – so many layers to this, with almost endless implications. I think the two markets are still pretty distinct – gas remains very regionalized and without anything… Read more »
Stability or leverage in oil and gas markets? Stability sounds like a good idea but I want stability for the fossil fuel market as we unwind the industries, not to… Read more »
This is a false dichotomy. It presumes intervention is required, presumes the goals of at least one of the range of options is achievable, and presumes at least one is… Read more »
Guess we need a clearer definition of exactly what ‘stability’ is and what it would require. My point of view suggests that technology disruption causes economic disruption in the lives… Read more »
Yes, Jane, precisely – what exactly is stability? You and Robert both toss those goals around pretty loosely as something warranting the Government waddling into markets and placing a big… Read more »
Elias — thanks indeed for your thoughts. Your comments regarding the differences between gas markets — less integrated, more regional, more likely to be affected by US production (assuming a… Read more »
Robert – I think there are already moves amoung U.S. policymakers to rethink the laws that govern U.S. exports of hydrocarbons. I was at an excellent forum at CSIS about… Read more »
Stephen, I am not sure what you mean by an energy market without interventions. Fossil market interventions began 100 years ago with investment incentives that are still with us today.… Read more »
Jane – in response to your question about interventions, let me flush out a few basic concepts, within the obvious limits of this forum. But first, let’s separate a few… Read more »
Restrict Liberty? Economic disruption as Corruption? I don’t think that is what I said. Liberty? How about a quote or 2 … “It is of great importance in a republic… Read more »
Jane – The inalienable right to life, liberty, and the pursuit of happiness is not caveated by anyone’s interpretation of “as scientifically as possible”. Nor do those rights give way… Read more »
We are not having a discussion … I really don’t believe that you think each of us is welcome to act in society in any way we damn well please… Read more »
Jane – Evidently, you don’t believe in liberty. Rather, you believe people need restrictions. You choose a Statist society. Frankly, I appreciate your candor. Most people advocating confiscation of the… Read more »
I think stability should be the goal in both oil and gas markets. Making our abundance available for sale on global markets is probably the best way to get to… Read more »