Once considered this statement seems so obvious but it also appears to be almost universally overlooked in the rhetoric around energy alternatives, consumption, conservation and climate change. The inescapable truth is that no economy can grow without increasing its consumption of energy; it is as essential an input to economic growth as any other. Certainly economies have seen reductions in energy consumption, often caused by disruptions such as recession, supply shortages or price shocks. Whatever the underlying causes, reductions have been temporary and growth in energy consumption has always resumed, perhaps at permanently lower or more efficient rates than before, but never-the-less continuing its upwards trend in relation to a growing economy.
The U.S. economy often takes a lot of criticism for being a profligate consumer of energy, but so it should be as our economy is also one of the most prosperous. An important fact that is often conveniently overlooked in these discussions is that the U.S. economy’s energy productivity, or the amount of energy the U.S. economy consumes to generate a dollar of GDP, is very close to the global average and we are continuing to improve this ratio. Yes that’s right there are more than 50 countries whose economies require more energy consumption per unit of economic output than ours and many of those are large and rapidly growing economies, such as China, Indonesia, many of the largest members of the former Soviet federation and even some members of the European Union.
Would you also be surprised to learn that the U.S. is the third largest producer of oil in the world and a very close second to the world’s largest producer of natural gas? Over the past twenty years the U.S. has increased its natural gas production by nearly 30%. Twenty-three years of oil production declines have been reversed and the U.S. has actually increased annual oil production each of the last three years. Just as pressure on global energy resources is increasing from economic development all over the world, technological developments are allowing us to unlock unconventional sources of oil and gas from prolific shale deposits underlying large portions of our country in economically efficient and environmentally sensitive ways. We can also reliably find and economically develop more conventional resources from smaller fields, deeper formations and in deeper waters than ever before.
As a result of the convergence of these factors, it is Bartlett’s perception that the U.S. oil and gas industry hasn’t enjoyed this much potential since the discovery at Prudhoe Bay in 1968. Yes there are significant environmental considerations but oil and particularly natural gas are the cleanest and least carbon intensive sources of energy available to meet growing global demand until other alternatives become both more practical and economic as viable replacements. The U.S. oil and gas industry has a significant and vital role not only in service to the world’s largest energy consumer but also as a leading global producer with significant resources of its own yet to be developed.
2 March 2012
