Dependent No More

Friday, April 6, 2012

There is a revolution going on in America, but it is not driven by the tea party or the Occupy Wall Street protests.

Instead, massive new reserves of gas, oil, and coal are being discovered almost everywhere in the United States, thanks to revolutionary methods of exploration and exploitation such as hydraulic fracturing (fracking) and horizontal drilling. Recent prices above $100 a barrel make even difficult efforts at recovery enormously profitable.

There were always known to be additional, untapped reserves of oil and gas in the petroleum-rich Gulf of Mexico, off America’s shores, and in the American West and Alaska. But even the top energy experts never imagined just how vast was the energy there—or beneath far more unlikely places such as South Dakota, Pennsylvania, Ohio, and New York. Some studies suggest that the United States has now expanded its known potential gas and oil reserves tenfold.

The strategic and economic repercussions of these new finds are staggering, and remind us how a once energy-independent and thereby confident American economy soared to world dominance in the early twentieth century.

America will soon again be able to supply all of its own domestic natural gas needs—and do so perhaps for the next ninety years, at present rates of consumption. We have recently become a net exporter of refined gas and diesel fuel, and already have cut imported oil from OPEC countries by one million barrels per day.

With expanded exploration and conservation, the United States could also eventually supply half its total petroleum needs. If we were to eliminate just five million barrels of our current daily nine million barrels of imported petroleum, the annual savings could reach nearly $200 billion per year. Eventually, the new gas and oil could add 1.6 million new jobs and add up to nearly $1 trillion in federal revenue.

That windfall would cut out about a third of our present annual trade deficit—well apart from additional income earned by new natural gas exportation. “Investments,” “shovel-ready jobs,” and “stimulus” would finally become more than empty sloganeering.

But America’s new oil discoveries are not occurring in a vacuum. The entire Western Hemisphere is enjoying a fossil fuel boom, from northern Canada to Brazil and Argentina. America’s back yard will soon be comparable to the oil-rich Persian Gulf, keeping more American money—and troops—at home. Illegal immigration should taper off as well, as oil-rich Latin American economies reap huge cash bonanzas. Hugo Chávez’s Venezuela will soon be simply one of many regional exporters.

Current crises in American foreign policy—Iran’s efforts to develop nuclear bombs, the protection of an embattled Israel, stopping the funding of radical Islamists—might be freed from the worries of perennial OPEC threats of cutoffs and price spikes.

Even top energy experts never imagined just how vast the energy supply was—and in such unlikely places.

Federal subsidies for inefficient corn-based ethanol production in the Midwest also could cease. That would save the Treasury billions of dollars and allow millions of American acres to return to food production to supply an increasingly hungry world.

The Obama administration’s efforts to subsidize green energy so far have proved both uneconomical and occasionally corrupt, as we have seen in the Solyndra affair. Meantime, more gas and oil can offer America critical breathing space until better technology makes wind, solar, and electric power more price-competitive, while staving off massive federal subsidies and a marked reduction in our standard of living.

Of course, there are sizable interests opposed to the new American gas and oil finds, not all of them foreign governments. Such opposition is reflected in the current Obama administration policy of halting new pipelines, placing moratoriums on offshore drilling, and putting lucrative federal lands off-limits. But will the oil-exporting gulf sheikdoms, Nigeria, or Iran better protect the world’s environment than American-based oil companies? Would our oil dollars or theirs be less likely to fuel terrorism, illegal arms sales, and rogue regimes?

Plentiful gas and oil can offer America critical breathing space until better technology makes wind, solar, and other green power competitive.

Considering the American poor and unemployed, how liberal is it, really, to keep energy prices high while stalling the creation of high-paying private-sector jobs that would both lower government costs in entitlements and empower the working classes?

In the presidential campaign, three issues dominate: national security, fiscal solvency, and high unemployment. Development of America’s vast new gas and oil fields addresses all three at once.

The idea of vastly expanding American gas and oil production in the twenty-first century seems unbelievable—almost as unbelievable as the present administration’s apparent reluctance to capitalize on its windfall.