America’s Energy Picture Twenty-first Century Prospects
Spencer Abraham and Branko Terzić
Horizons Autumn 2015, No.5134
Spencer Abraham and Branko Terzić
Horizons Autumn 2015, No.5134
THE United States is now on the brink of reconfiguring its role in global energy markets from that of being a major energy consumer to becoming a major energy exporter. As a result, America has developed a diverse energy supply portfolio enabling it to weather both market interruptions and geopolitical crises. The source of this resilience can be found in reviewing the U.S. energy balance as reported annually by the Energy Information Administration (EIA) in its chart of Primary Energy Consumption by Source and Sector for 2014.
A look back over charts of previous years will show that changes in the U.S. energy picture since the middle of the twentieth century have hinged on five major factors: the growth of total energy demand; the dominance of petroleum as the fuel for transportation; the availability of low-cost coal supply; the increase of natural gas for electricity production; and an increase in electricity use itself in the American economy.
The most significant development in the first decade of the twenty-first century has been the growth of domestic petroleum and natural gas supply, and its production by means of horizontal drilling and hydraulic fracturing technologies. This growth in domestic supply and production has resulted in the construction of natural gas export facilities in the form of Liquefied Natural Gas (LNG) and a potential change in U.S. federal law to allow for the export of crude oil in the near future. The United States thus enters an era when it is not only secure in its own energy supply, but—as a result of that security and growing production—is also in a position to be able to enhance global energy security.
An examination of the American energy picture for the most recent available year data, namely 2014, shows that the U.S. economy is not dominated by any single energy source. While petroleum is significant, at 35 percent, natural gas represents 26 percent, coal 18 percent, renewables (mostly hydroelectric) 10 percent, and nuclear eight percent of total energy production. This diversified portfolio of energy supply is increasingly domestic in source, a factor that provides for both optionality in energy policy decisions, and change in international relations. The authors have observed these changes in their roles as U.S. Secretary of Energy and federal and state energy regulator respectively, and this article is intended to introduce the distinguished readers of Horizons to the total energy picture in the United States by examining each of the major energy sources.
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