Windfall
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According to the U.S. EIA: “Chapter 3: Natural Gas,” International Energy Outlook 2016, U.S. Energy Information Administration, https://www.eia.gov/outlooks/ieo/nat_gas.php.
The price to import natural gas: “European Union Natural Gas Import Price,” YCharts, November 3, 2016, https://ycharts.com/indicators/europe_natural_gas_price.
In Asia, where roughly 70 percent: “WoodMac: 2014 Asian LNG Demand Much Lower Than Expected,” LNG World News, January 5, 2015, www.lngworldnews.com/woodmac-2014-asian-lng-demand-much-lower-than-expected/.
In Japan, the price of importing LNG: “Japan Liquefied Natural Gas Import Price,” YCharts, November 4, 2016, https://ycharts.com/indicators/japan_liquefied_natural_gas_import_price.
Their arrival gave European utilities: Norway and Russia collectively supplied nearly 70 percent of Europe’s natural gas imports. BP p.l.c., BP Statistical Review of World Energy 2012 (BP, June 2012), https://www.laohamutuk.org/DVD/docs/BPWER2012report.pdf.
Tying the price of natural gas: De Pous held this ministerial position from 1959 to 1963. The architect of the first European cross-border trade in natural gas, de Pous supposedly laid out the framework for natural gas trade in a ten-page policy document and with only half a day’s debate in the Dutch parliament. Part of his structure involved indexing the price of natural gas to the price of oil, a practice that was originally known as “Nota de Pous.” For more on the history of oil indexation, see Ludovico Grandi, “European Gas Markets: From Oil Indexation Prices to Spot Prices?” Energy Brains—Energy Analysis, June 2014, www.energybrains.org/docs/EA/EnergyBrains_EA_NatGasPricing_LG_2014.pdf.
The simplicity of this linkage: The simplicity of de Pous’s proposal was also appealing given that this pricing mechanism was expected to be short-lived, given anticipations that the gas trade would soon be made obsolete by the rise of nuclear power. Nuclear power plants were just beginning to spring up and were considered to be safe and clean alternatives. For further information, see Henk Kamp, “The Bright Past and Challenging Future of Natural Gas,” speech, symposium, “The Bright Past and Challenging Future of Natural Gas,” October 3, 2013, Government of the Netherlands, https://www.government.nl/documents/speeches/2013/10/03/the-bright-past-and-challenging-future-of-natural-gas.
From 2005 to 2012, the amount of natural gas: According to the International Gas Union, gas-on-gas pricing in Europe increased around 7 percent in 2005 to more than 60 percent in 2015 while oil indexation decreased from more than 80 to below 40 percent during the same period. International Gas Union, IGU World LNG Report: 2017 edition, 17.
In Asia, the shift was less dramatic: According to the IEA, in 2005, in 95 percent of gas trade in the Asia-Pacific, the price was indexed to oil; in 2010, this number was 88 percent. Warner ten Kate, Lászlo Varró, and Anne-Sophie Corbeau, Developing a Natural Gas Trading Hub in Asia: Obstacles and Opportunities (Paris: OECD Publishing, 2013), www.iea.org/media/freepublications/AsianGasHub_WEB.pdf. Also see “Figure 3-26, Global LNG trade by contract type, 2010 and 2014,” International Energy Outlook 2016, U.S. Energy Information Administration, www.eia.gov/outlooks/ieo/excel/figure3-26_date.xls.
The percentage of LNG traded: International Gas Union, IGU World LNG Report, 2017 edition, 15–20.
Regional trading hubs are slowly beginning: Victoria Zaretskaya and Scott Bradley, “Natural Gas Prices in Asia Mainly Linked to Crude Oil, but Use of Spot Indexes Increases,” U.S. Energy Information Administration, September 29, 2015, www.eia.gov/todayinenergy/detail.cfm?id=23132. Also see Jonathan Stern and Howard Rogers, “Challenges to JCC Pricing in Asian LNG Markets,” The Oxford Institute for Energy Studies, 2014; Warner Ten Kate, Lászlo Varró, and Anne-Sophie Corbeau, Developing a Natural Gas Trading Hub in Asia: Obstacles and Opportunities (Paris: International Energy Agency, 2013).
First, the price of the overwhelming majority: Eighty percent of U.S. LNG volumes for projects under construction as of 2015 were linked to Henry Hub or under a hybrid pricing mechanism linked to Henry Hub. Victoria Zaretskaya and Scott Bradley, “Natural Gas Prices in Asia Mainly Linked to Crude Oil, but Use of Spot Indexes Increases,” U.S. Energy Information Administration, September 29, 2015, www.eia.gov/todayinenergy/detail.cfm?id=23132.
Jonathan Stern, an Oxford University scholar: James Nicoli, “The Emergence of an Asia-Pacific LNG Trading Hub,” Petroleum Economist, April 12, 2016, www.petroleum-economist.com/articles/midstream-downstream/lng/2016/the-emergence-of-an-asia-pacific-lng-trading-hub.
Moreover, increased LNG trade: See Kenneth B. Medlock III, “Global Natural Gas Markets: Recent Trends and Emerging Fundamentals,” presentation, Harvard Energy Conference, Harvard Business School, November 14, 2013, 9, http://bakerinstitute.org/research/global-natural-gas-markets-recent-trends-and-emerging-fundamentals/.
Four: America’s Unrequited Love
Speaking as a candidate in May 2016: Andrew Restuccia, “Trump Calls for ‘Complete American Energy Independence,’ ” Politico, May 26, 2016, http://www.politico.com/story/2016/05/donald-trump-energy-drilling-fossil-fuels-223628.
only two months into his presidency: Donald J. Trump, “Presidential Executive Order on Promoting Energy Independence and Economic Growth,” The White House Office of the Press Secretary, March 28, 2017, https://www.whitehouse.gov/the-press-office/2017/03/28/presidential-executive-order-promoting-energy-independence-and-economi-1.
In 2010, President Barack Obama exhorted: “President Obama’s Oval Office Address on the BP Oil Spill: ‘A Faith in the Future that Sustains us as a People,’ ” Barack Obama White House Archives, June 16, 2010, https://obamawhitehouse.archives.gov/blog/2010/06/16/president-obamas-oval-office-address-bp-oil-spill-a-faith-future-sustains-us-a-peopl.
his predecessor, George W. Bush, urged: President George W. Bush, “State of the Union Address by the President” (speech, United States Capitol, Washington, D.C., January 31, 2006), https://georgewbush-whitehouse.archives.gov/stateoftheunion/2006/.
In 1988, Vice President George H. W. Bush: George Bush, “Address Accepting the Presidential Nomination” (speech, Republican National Convention, New Orleans, LA, August 18, 1988), http://www.presidency.ucsb.edu/ws/?pid=25955.
while President Jimmy Carter: Jimmy Carter, “Address to the Nation on Energy and National Goals: ‘The Malaise Speech’ ” (speech, Oval Office, The White House, Washington, D.C., July 15, 1979), The American Presidency Project, http://www.presidency.ucsb.edu/ws/?pid=32596.
Just four years earlier: Gerald Ford, “State of the Union Address by the President,” (speech, United States Capitol, Washington, DC, January 15, 1957), www.fordlibrarymuseum.gov/LIBRARY/speeches/750028.htm.
In 1973, his predecessor, Richard Nixon: Charles Homans, “The Best-Laid Plans,” Foreign Policy, January 3, 2012, http://foreignpolicy.com/2012/01/03/the-best-laid-plans/?wp_login_redirect=0.
In the 2000s, concerns arose: In 2003 testimony before Congress, Federal Reserve chairman Alan Greenspan cautioned that “we are not apt to return to earlier periods of relative abundance and low prices anytime soon” and therefore urged Congress to prepare for more LNG imports. Natural Gas Supply, Before the Committee on Energy and Natural Resources, 108th Cong. (July 10, 2003) (testimony of Alan Greenspan, Chairman of the Federal Reserve), www.federalreserve.gov/boarddocs/testimony/2003/20030710/default.htm.
Of the ten U.S. recessions: James D. Hamilton, “Oil and the Macroeconomy,” working paper, Department of Economics, University of California, San Diego, La Jolla, August 25, 2005, 1, www.econweb.ucsd.edu/~jhamilto/JDH_palgrave_oil.pdf.
Although economists disagree: According to the more conservative linear VAR model of a U.S. Federal Reserve study examining seven oil price shocks since 1979, the average cumulative effect on GDP over a horizon of eight quarters following the price shock (after controlling for the effects of other macroeconomic indicators) was a 0.91 percent decrease in 1979 and a 0.74 percent decrease in 2007. Lutz Kilian and Robert J. Vigfusson, “The Role of Oil Price Shocks in Causing U.S. Recessions,” I
nternational Finance discussion paper 1114, Board of Governors of the Federal Reserve System, August 2014, www.federalreserve.gov/pubs/ifdp/2014/1114/ifdp1114.pdf.
Secretary of State Condoleezza: Rice is quoted in Gal Luft, “Dependence on Middle East Energy and Its Impact on Global Security,” in Energy and Environmental Challenges to Security, eds. Stephen Stec and Besnik Baraj (Springer Science & Business Media, 2006), 197.
That same year, New York Times columnist: Thomas L. Friedman, “Fill ’Er Up with Dictators,” New York Times, September 27, 2006, www.nytimes.com/2006/09/27/opinion/27friedman.html.
The Energy Policy and Conservation Act: “The Energy Policy and Conservation Act (P.L. 94-163, 42 U.S.C. 6201),” William & Mary Environmental Law and Policy Review 1, no. 2 (1976), http://scholarship.law.wm.edu/cgi/viewcontent.cgi?article=1488&context=wmelpr.
It also sought to increase: One of the goals of the Energy Policy and Conservation Act of 1975 was “increasing domestic energy production and supply.” Ibid.
Tax incentives for the increased production: Molly F. Sherlock and Jeffrey M. Stupak, Energy Tax Incentives: Measuring Value Across Different Types of Energy Resources (CRS Report No. R41953) (Washington, DC: Congressional Research Service, March 19, 2015), 12, https://www.fas.org/sgp/crs/misc/R41953.pdf.
These measures paid off temporarily: Net imports decreased from 8.6 mnb/d in 1977 to 4.3 mnb/d in 1985. “U.S. Net Imports of Crude Oil and Petroleum Products,” U.S. Energy Information Administration, October 31, 2016, www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mttntus2&f=a; “U.S. Product Supplied of Crude Oil and Petroleum Products,” U.S. Energy Information Administration, www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTUPUS2&f=A.
But such policies could not keep up: “U.S. Field Production of Crude Oil,” U.S. Energy Information Administration, April 28, 2017, https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus2&f=m.
By 2007, American imports: “U.S. Net Imports of Crude Oil and Petroleum Products,” U.S. Energy Information Administration, October 31, 2016, www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mttntus2&f=a.
Nearly two-thirds of America’s: To be precise, 59 percent of U.S. consumption of oil was met by imports in 2007. “Annual Energy Outlook 2010 Table: Liquid Fuels Supply and Disposition,” U.S. Energy Information Administration, https://www.eia.gov/outlooks/aeo/data/browser/#/?id=11-AEO2010&cases=aeo2010r&sourcekey=0.
Co-led by FedEx chairman: Matthew L. Wald, “Executives Urge Action to Cut Dependence on Foreign Oil,” New York Times, December 13, 2006, www.nytimes.com/2006/12/13/business/worldbusiness/13energy.html.
Carville, a Democratic strategist: See Thomas L. Friedman, “The Energy Mandate,” New York Times, October 13, 2006, www.nytimes.com/2006/10/13/opinion/13friedman.html.
Enter serendipity: “Serendipity,” English Oxford Living Dictionaries, 2017, https://en.oxforddictionaries.com/definition/serendipity.
As noted in earlier chapters: U.S. crude oil production was 5 mnb/d in 2008; it reached 9.6 mnb/d in 2015. “U.S. Field Production of Crude Oil,” U.S. Energy Information Administration, October 31, 2016, www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus2&f=a.
Natural gas production increased: The increase in U.S. natural gas production of 40 percent refers to all forms of natural gas. “U.S. Natural Gas Gross Withdrawals,” U.S. Energy Information Administration, October 31, 2016, www.eia.gov/dnav/ng/hist/n9010us2m.htm.
The United States became: When measured as petroleum and other liquids, U.S. production surpassed that of Saudi Arabia in 2013, although in terms of just crude oil, Saudi Arabia was still a bigger producer. “Total Petroleum and Other Liquids Production 2016,” U.S. Energy Information Administration: Beta, 2016, https://www.eia.gov/beta/international/data/browser/#/?pa=0000000000000000000000000000000000g&c=ruvvvvvfvtvnvv1urvvvvfvvvvvvfvvvou20evvvvvvvvvnvvuvo&ct=0&tl_id=5-A&vs=INTL.53-1-AFG-TBPD.A&vo=0&v=H&start=1980&end=2016; “Production of Crude Oil Including Lease Condensate 2016,” U.S. Energy Information Administration: Beta, 2016, https://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=5&pid=57&aid=1&cid=SA,US,&syid=2005&eyid=2014&unit=TBPD. For numbers of U.S. and Russian natural gas production, see “Gross Natural Gas Production 2014,” U.S. Energy Information Administration: Beta, https://www.eia.gov/beta/international/data/browser/#/?pa=g0q&c=000000000000000000000000000000000000000400000002&ct=0&tl_id=3002-A&vs=INTL.3-1-RUS-BCF.A&vo=0&v=H&start=1980&end=2014.
Given a further leg-up: U.S. total petroleum consumption came down 8.9 percent from 2005 to 2013. Consumption did however begin to rise in response to lower prices in 2014 and 2015. “Total Petroleum Consumption 2015,” U.S. Energy Information Administration, 2015, www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=5&pid=5&aid=2&cid=r1,&syid=2005&eyid=2013&unit=TBPD.
these production increases reduced: “Table 3.1 Petroleum Overview,” U.S. Energy Information Administration, https://www.eia.gov/totalenergy/data/browser/?tbl=T03.01#/?f=A&start=1949&end=2016&charted=12-15; “Table 3.3a Petroleum Trade Overview,” U.S. Energy InformationAdministration, https://www.eia.gov/totalenergy/data/browser/?tbl=T03.03A#/?f=A; “Table 3.3b Petroleum Trade: Imports and Exports,” U.S. Energy Information Administration, https://www.eia.gov/totalenergy/data/browser/?tbl=T03.03B#/?f=A.
The specter of a growing: See, for instance, Gary J. Schmitt, “Energy Conundrums: Natural Gas: The Next Energy Crisis?” Issues in Science and Technology 22, no. 4 (Summer 2006), http://issues.org/22-4/schmitt-3/.
Demand for natural gas continued: “U.S. Liquefied Natural Gas Imports,” U.S. Energy Information Administration, October 31, 2016, www.eia.gov/dnav/ng/hist/n9103us2m.htm.
There is even less uncertainty: The U.S. Energy Information Administration forecasts a modest but steady upward curve in U.S. natural gas production out to 2040. “Table: World Total Natural Gas Production by Region,” U.S. Energy Information Administration, www.eia.gov/outlooks/aeo/data/browser/#/?id=45-IEO2013®ion=0-0&cases=Reference&start=2009&end=2039&f=A&linechart=Reference-d041117.1-45_IEO2013~~Reference-d041117.3-45-IEO2013&ctype=linechart&sid=&sourcekey=0.
The scale and swiftness with which: One might draw a comparison with Pyongyang’s acquisition of a nuclear bomb, which propelled North Korea from a mere menace to a country absorbing the attention of China, Russia, and the United States. Or one could point to the discovery of oil or the development of desalination technology without which the establishment of large cities in the Arabian Peninsula would be impossible and today’s Saudi Arabia unimaginable. Or perhaps one could highlight the construction of the Suez and Panama Canals, which in the span of a decade solidified Egypt and Panama as strategic pieces of real estate, if not great powers.
In 2005, Andre Hoth: “Singing for Change: A New Anthem for Energy Independence,” PR Newswire, April 5, 2006, www.prnewswire.com/news-releases/singing-for-change-a-new-anthem-for-energy-independence-55953472.html.
But a world in which: Energy independence has also inspired poetry. Sidi J. Mahtrow, “Energy Independence,” PoemHunter.com, July 30, 2008, www.poemhunter.com/poem/energy-independence-2/.
Then now is the time to act
And put the Nation back on track
To be energy independent from all
Those that seek our downfall!
It is true that virtually: “Total Biofuels Consumption 2012,” U.S. Energy Information Administration, 2012, www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=79&pid=79&aid=2#; “Total Primary Energy Production 2013,” U.S. Energy Information Administration, 2013, www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=1&pid=1&aid=24.
But oil self-sufficiency: Recent forecasts suggest that, under some circumstances, the United States could in fact become a net oil exporter in the 2030s. According to the IEA’s World Energy Outlook of 2016, if remaining recoverable reserves are larger than currently estimated, the United States could become a net exporter of oil by the early 2030s. International Energy Agency, World Energy Outlook 2016, 134.
While U.S. oil imports: The United States is
already a net exporter of refined petroleum products. Data can be found at “Liquid Fuels: Net Product Imports,” U.S. Energy Information Administration, 2016, www.eia.gov/forecasts/aeo; “Table: Petroleum and Other Liquids Supply and Disposition,” U.S. Energy Information Administration, Annual Energy Outlook, 2017, https://www.eia.gov/outlooks/aeo; International Energy Agency, World Energy Outlook, 2016, 134; BP, BP Energy Outlook, 2017, http://www.bp.com/content/dam/bp/pdf/energy-economics/energy-outlook-2017/bp-energy-outlook-2017.pdf.
In the face of cheap oil: John M. Rothgeb Jr., U.S. Trade Policy: Balancing Economic Dreams and Political Realities (Washington, DC: CQ Press, 2001), 146, footnote 3.
Ultimately, Eisenhower was swayed: Ibid., 146–47.
After failed attempts to induce: Dwight D. Eisenhower, “Proclamation 3279—Adjusting Imports of Petroleum and Petroleum Products into the United States” (March 10, 1959), The American Presidency Project, www.presidency.ucsb.edu/ws/?pid=107378; Dwight D. Eisenhower, “Statement by the President Upon Signing Proclamation Governing Petroleum Imports,” The American Presidency Project, March 10, 1959, http://www.presidency.ucsb.edu/ws/?pid=11676.
He stressed that it would: See Richard A. Melanson and David Mayers, eds., Reevaluating Eisenhower: American Foreign Policy in the Fifties (Champaign: University of Illinois Press, November 1, 1988), 157–58; and Vito Stagliano, A Policy of Discontent: The Making of a National Energy Strategy (Nashua, NH: PennWell Publishing, July 15, 2011), 12.
A task force initiated by: Stagliano, A Policy of Discontent: The Making of a National Energy Strategy, 13.