America’s Resource Renaissance

American oil industry leadership groups such as the National Petroleum Council and the American Petroleum Institute have been meeting in recent months to fashion new frameworks for the industry to ensure best practices for oil and natural gas drilling. That’s the good news. The bad news is that the task at hand is proving highly complex, and so far, the industry seems to lack consensus on how to move forward, especially on the topic of how far it can go in policing itself.

Much is a stake. As my new article in Foreign Policy magazine explains, I explain how technological and geopolitical factors are combining to shift the focus of the international oil industry back to the Americas. The possibility exists that the United States could see a resurgence back to its mid-20th century preeminent place in the global energy industry, with our vast endowment of unconventional reserves and innovative technologies coming to the forefront of global energy supply. It is ours to lose.

There is no question that the turmoil in the Middle East could disturb its leading role in fueling the global economy. This would mean that tapping the energy potential in the United States, Canada, Mexico and Brazil will be all the more important.

Industry best practices will be critical to the United States being able to be a global leader in energy technology and resource development. The industry is putting much effort into getting this right. But policing itself can only go so far, especially in onshore operations where the number of operators is so large.

As Presidential candidates debate the merits of government “regulation” of business and the wonders of “getting out of the way of business,” let us not forget that even Republican candidate Governor Rick Perry of Texas has signed legislation requiring the public disclosure of fracking fluids.

The reality is that there is no substitute for sound regulation and the industry’s endorsement of good public policy would ensure the goals that the industry is seeking in its own fora. An independent arbiter for implementation of oversight of best practices is the best way to get the industry out of its how-to-police-itself bind. Either an independent agency modeled after Canada’s chief safety officer paradigm or well trained state or federal government regulators ensure that sound practice will lead to a healthy industry and safe and enduring access to the rich endowment of resources available in the United States.

With so much at stake to our national interest and the global economy, a strong industry voice rejecting the nonsensical “no regulation of business” argument in American politics would be welcome.

2 Comments

  1. Johnny

    I am not aware of anyone who advocates “no regulation of business”, though I am sure there are a few idiots that can be found who believe in even more bizarre ideas. There is a big difference between “no regulation” and “excessive” regulation. Yes, I know the line between the two will forever be debated, but that’s a feature of free and open society.

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  2. I read your article in Foreign Affairs and I mostly agree with you but your optimism is premature.

    Sure, with all the hand-wringing about peak oil in the headlines and the run up in gas prices, few Americans bother to take the time to do the simple math that shows that the United States is awash in energy resources and is potentially energy self-sufficient. Forget petroleum from oil wells; total U.S. energy reserves that count coal, oil sand, oil shale, natural gas, and offshore gas hydrates inside America’s borders can be measured in the thousands of years. Many of our economic competitors also have vast reserves in one or two of these non-conventional energy sources, but the United States is unique in the amount and diversity of the energy resources within its borders and the technical ability to economically extract that energy, with minimal impact on the environment.

    The United States is in fact the “Saudi Arabia” of oil shale thanks to our vast reserves in the Midwest. Gas hydrates off the East Coast of the United States alone hold at least a thousand years’ supply of natural gas.

    In green renewable energy, the United States is holding a technically strong hand. While environmentalists today waste their energy touting loud, lumbering, inefficient, unreliable, unscalable windmills that defile the landscape, defoliate the land beneath them and kill off the local bird population, the future of green energy is more likely to be microscopic, oil excreting algae (oilgae) and is likely to come from the same oil conglomerates we know and love today. The United States is the runaway leader in researching and developing sustainable, environmentally benign, low-cost green energy from genetically-modified (GM) algae.

    When scaled to production levels, these little critters can soak up massive amounts of CO2 and secrete billions of barrels of light, sweet Texas crude that is burnable in the very same internal combustion engines we use today.

    Oil producing algae converts solar radiation most efficiently in the warm baths of undrinkable and unusable brackish water that lies in abundance beneath the remote, unpopulated, sun-drenched, semi-arid steppes of America’s southwest.

    The United States is still the leader in the entrepreneurial arts: discovery, innovation, risk-taking, finance, and marketing.

    We have the wherewithal to make the twenty-first century a Second American Century.

    But if we do not get America off the bench and back in the game, our demographic advantage will be squandered by the unresolved problem of illegal immigration and the political inability to implement a rational legal immigration policy that recruits critical talent and skills from abroad. Our green energy potential and entrepreneurial skills will amount to nothing if we are unable to drive green innovation with a rational price on carbon. And any breakthroughs that we do achieve in green energy or in any other technology are likely to be quickly transferred to and monetized by China and India unless we shift the burden of taxes and healthcare away from production towards consumption.

    This is where the LMAD plan comes in.

    Plan Blog: letsmakeadeal-thebook.com/

    Facebook: facebook.com/pages/Lets-Make-A-Deal-The-Book/143298165732386

    Twitter: twitter.com/#!/lmadster

    Or just Google “LMADster” for more info.

    #2