…The Answer is Simple…
America’s New Energy Crisis, blared the WSJ headline.
The headline was followed by a plethora of jumbled explanations of why the United States is suffering an energy shortage not seen since the 1970s.
At the end of the article, the WSJ concludes; “No one knows what to do.”
Problems cited by the WSJ article included:
- High prices for gasoline and diesel fuel
- High prices for natural gas
- Inability of the grid to provide low-cost reliable electricity
- Reluctance of oil and natural gas producers to drill and frack
But the solution is actually simple and straight forward.
However, it will take time to dig out from the hole created by politicians fixated on climate change and green energy.
A single step would go a long way towards solving these problems.
Abandon the war on fossil fuels.
This should not be an issue for anyone other than climate extremists.
- The science has shown that CO2 emissions are not an existential threat to mankind. For example, Dr. Happer and Dr. Wijngaarden have shown that a doubling of atmospheric CO2 will have little affect on temperatures.
- Even those who are concerned about climate change have been very clear it’s better to mitigate the effects of warming than to eliminate the use of fossil fuels. Bjorn Lomborg, for example, has written several op-eds in the WSJ to this effect.
Abandoning the war on fossil fuels would provide investors with certainty that their investments won’t be made obsolete by climate regulations.
Simple actions would put an end to high prices for gasoline, diesel fuel, natural gas, and electricity.
Lowering the cost of gasoline and diesel fuel.
Increasing the supply of crude oil would bring the cost of gasoline and diesel fuel down, but the US would still remain with inadequate refining capacity to meet domestic demand.
The lead analyst at Rystad Energy estimates the United States has the largest recoverable oil reserves in the world, and ranks the top three countries as follows:
- US 264 BB
- Russia 256 BB
- Saudi Arabia 212 BB
Opening federal lands and offshore areas for exploration and development in Alaska and the American west, and along America’s coastal waters, while issuing necessary leases, would result in an abundant supply of crude oil.
But it’s also necessary to eliminate onerous regulations, such as those designed to stop fracking, and those designed to prevent the use of pipelines, to allow for the efficient development of reserves.
These simple steps would increase the supply of oil so that it would meet demand.
Pipelines would allow balancing of oil supplies so that the right crude can be safely brought to the refinery best equipped to handle it.
Whether it’s appropriate to rely on international trade to balance the supply of refined products, e.g., gasoline and diesel fuel, is an issue that involves both state and federal governments. Currently, the US exports refined products from areas where there is surplus refining capacity and imports it to areas where there is insufficient refining capacity.
This year, refining, nationwide, is running at 95% of capacity, essentially full capacity.
The US hasn’t built a new major refinery since 1977, and making the multi-billion dollar investment in a new refinery in the face of local regulations and public resistance is problematic.
Increasing the supply of oil will result in lower prices for the crude used by refineries, which will result in lower gasoline and diesel fuel prices.
Lowering the cost of Natural Gas
The United States has the largest reserves of natural gas in the world, far more than Middle Eastern countries or Russia. Most of it is in Appalachia.
Pipelines are needed to move Appalachian natural gas to where it can be processed and used.
Building these pipelines should be a high priority so that LNG can be exported to our allies without increasing the cost of natural gas to US consumers. They are also needed to bring natural gas to New England where natural gas is in short supply and is being imported from foreign countries.
Restoring Reliability of the Electric Grid
Restoring grid reliability should be the number-one objective of the Federal Energy Regulatory Commission (FERC) and the regional transmission organizations and independent system operators (RTO/ISOs), and state and utility regulators. Low-cost electricity should be their next most important objective.
Only baseload power, i.e., nuclear, coal-fired and natural gas combined cycle power plants can provide the reserve capacity needed to prevent blackouts as the result of unexpected events, such as sudden increases in demand or a power plant failure.
Wind and solar undermine grid reliability because they are not always available when needed, and increase the cost of electricity because they need batteries for back up when the wind does’t blow and the sun doesn’t shine.
Abandoning the war on fossil fuels would restore the United States to being energy independent, while ensuring low-cost energy for all Americans and American industry.
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