Policymakers miss strong energy position’s meaning, experts say

A dramatically improved oil and gas supply position brought about by technological breakthroughs puts the US in a position to do more than make North America energy independent, experts said during an Oct. 9 launch of a major new book at the Woodrow Wilson International Center for Scholars.

They suggested policymakers and the general public still haven’t recognized how much the movement from growing US oil and gas scarcity to considerable domestic abundance has changed the country’s foreign policy options.

“We have a very different view of the US energy endowment than we had 5 years ago,” said Daniel Yergin, vice-chairman of IHS and a contributor to Energy and Security: Strategies for a World in Transition, a revised and updated second edition co-published by the Wilson Center and Johns Hopkins University Press.

“Yet energy issues are still divisive, starting with the Keystone XL crude oil pipeline,” Yergin said.

Jan H. Kalicki, a counselor for international strategy at Chevron Corp. who co-edited the book with David L. Goldwyn, president of Goldwyn Global Strategies, noted, “It’s time to connect the dots between energy and international security. We have enormous negotiating power now.”

Kalicki said there have been some changes since the book’s first edition was published, such as establishment of an energy bureau at the US Department of State and increased global capacity within the US Department of Energy, but more needs to be done to bring about energy interdependence, which he considers a more realistic strategy than energy independence.

Foreign policy tool

Goldwyn, who was the first special energy envoy at DOS, said the US should be prepared to use energy as a foreign policy tool to sustain the domestic boom and allow the necessary infrastructure to be built, use revenue from it to invest in low-carbon technology research and development, and modernize energy consumption and emergency response policies. “Now that we have declining demand and enormous resources, we could put oil and gas on the global market in response to a supply emergency,” he noted.

Frank A. Verrastro, who holds the James R. Schlesinger Chair for Energy and Geopolitics at the Center for Strategic and International Studies, and is another contributor to the book, said new technology now lets producers drill 6 miles deep and go out 2 miles to reach a target the size of a chair.

“We can be in these prospects for years and years,” he declared. “The impacts are already taking hold economically and politically. We now have 22 tight oil plays, and our liquids production—including gas liquids and ethanol—now rivals Saudi Arabia’s. If our resources are that large, our policies and institutions have to change.”

US and Saudi Arabian oil challenges are similar, Kalicki said. “They don’t like the idea they’re using oil to generate electricity,” he explained. “That’s why they’d like to start developing their own tight gas resources. Meanwhile, other countries see we’re more of a global energy player, something many of our own officials don’t understand.”

Goldwyn added, “We’re freer now to speak out on behalf of democracy and freedom because we’re not dependent on oil imports from countries where those practices are suppressed.”

Noting the US government remained partially shut down as the new book was released, Yergin said, “This is probably not a good time for us to lecture other countries on democracy and its benefits.”

Contact Nick Snow at nicks@pennwell.com.

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