Sustainable Transportation Energy Pathways (STEPS)
Jaffe, Amy Myers (2014) Introduction to Energy Strategy Reviews volume “U.S. Energy Independence: Present and Emerging Issues". Energy Strategy Reviews 5, 1 - 3
This special issue identifies the major strategies that are enhancing the possibility that the United States will become energy self-sufficient in the coming decade and their implications for US responses to climate change. Evaluations include both analysis of the impact of US federal level and state level strategic energy policies already implemented as well as those that are under consideration and discussion. The issue also covers strategic corporate responses to these policies and to ongoing conditions in US energy markets. The volume shows that these strategies have, in fact, are contributing to dramatically different outcomes for the US energy landscape than the era of scarcity that have characterized the US energy situation in the past four decades and offers lessons for other regions of the world.
After decades of dwindling energy supply and rising oil and gas demand, the United States finds itself in a new strategic position. Three decades of policies designed to curb oil demand and growth in transportation fuel use are finally paying off, with US oil consumption falling almost 10% between 2005 and 2013 and expected to find deeper reductions in the coming decades. But the dwindling demand outlook is only part of the new US energy equation. Technological innovation and new investment strategies by US independent oil companies are bringing about a renaissance in US domestic oil and gas production that is making a substantial contribution to the prolific US energy supply outlook. That rise in domestic oil and gas production is considered so promising, it has opened the way for the United States to consider lifting its decades-old ban on oil and gas exports from the lower 48 continental shelf, with large geopolitical and economic consequences.
As Scott D. Sheffield, chairman and chief executive officer of Pioneer Natural Resources, a large US independent oil and gas producer, explains in the Vision article that opens the issue, the ban was put in place in the midst of the Arab oil embargo that created long lines at American gasoline stations and soaring prices. At that time, more than 30 years ago, the US Congress decided it needed to act to keep domestically produced oil at home, in the face of what it believed would be a permanent scarcity of supply. Sheffield argues that the ban has outlived its usefulness and now threatens to reduce US production because a looming mismatch in the quality of oil being produced in the United States and the kind of oil needed for processing means that domestic output cannot find buyers from within the domestic oil refining industry. He calls on the United States to lift the ban, quoting a Brookings Institution study that concludes that allowing US crude oil to go to "the refineries that can best process it most efficiently, whether at home or abroad, is in the broad (US) national economic interest."
The possibility for lifting the US oil export ban comes in the wake of predictions that the country could become energy self-sufficient in the coming decades. US oil demand is expected to decline by more than 20-30% in the next twenty years as Neff and Coleman discuss in an analysis of the US long term supply and demand outlook. Neff and Coleman tackle the question of whether US supply and demand might equilibrate and the role that US federal automotive policy will play in reducing US dependency on imported oil.
Already, the Obama administration has paved the way for limited exports of liquefied natural gas (LNG) from the United States. Medlock, Jaffe and O'Sullivan utilize a dynamic spatial non-stochastic intertemporal general equilibrium model to analyze the geopolitical and economic benefits that might derive to the United States from various possible strategies towards such exports. In their study which uses scenario analysis, Medlock, Jaffe and O'Sullivan find that simply accelerating US LNG exports does not best position the United States to reap the greatest and most important benefits it can from exporting its natural gas. One key aim for US LNG exports would be to help diversify supplies available to Europe as it struggles to limit its exposure to a possible cut off of Russia gas supplies in the wake of an escalating conflict between Moscow and Ukraine over the latter's future borders and status. The study shows that a US strategy to promote market liberalization together with opening up a higher volume on US LNG exports would be more effective in promoting long term US geopolitical interests.
To date, shale gas proponents have pointed to falling US greenhouse gas emissions in recent years as evidence that rising shale gas production is not only enhancing US energy security but also contributing to the US′ long term ability to combat climate change. In May 2014, the US Environmental Protection Agency announced that in 2012, US greenhouse gas emissions fell to their lowest levels in 17 years. An analysis of the data showed a large drop in US coal-fired electricity, as natural gas and renewable energy gained a larger share of the power market. While wind and solar energy only represent about 5% of total US electricity sources, natural gas is poised to pull ahead of coal as the largest source for fuel for electricity in the US. Nichols, Victor, and Balash model five scenarios using the MARKAL energy model to determine if the shale gas revolution will continue to offer both energy security and climate change benefits. The study finds that trade-offs between energy security and climate benefits may ensue in the electricity sector. Under scenarios where high shale resources are available and a carbon price emerges from implementation of carbon policy, study results show that while US net energy imports can be reduced, the United States experiences a lower diversity of fuel sources for electricity supply.