208
$11–$12 per MMBtu range, stoking George Mitchell’s interest in shale. Despite the
current high levels of O&G production in the U.S. from shale resources, peak oil is
still a concern. These resources are finite; they will peak and begin to decline sooner
or later. Hydrocarbons from shale should not be treated as the opportunity to continue business as usual, but instead viewed as a holding action to keep things afloat
for a few more years until new, more sustainable and environmentally-friendly
energy resources can be developed and brought online. As a nation, we ignore the
concept of peak oil at our peril.
The decline in U.S. domestic production after peak oil was reached in the 1960s
was replaced by increased amounts of imports, which resulted in the OPEC oil
embargo against the United States in 1973–74 (refer back to Chap. 4). If the
U.S. responds to an anticipated, similar decline in oil production from shale
resources in the next decade or two in the same manner, we are going to quickly
relapse into our addiction to imported oil. Except this time, we will have some stiff
competition.
Both China and India appear to be repeating the U.S. playbook. These two
nations together account for 20% of world oil demand, yet 70% of oil in China is
imported and nearly 80% in India (Slav 2019). China is also importing significant
amounts of natural gas as LNG, and is negotiating the potential development of a
pipeline to bring in Russian gas. As China and India become increasingly industrialized using imported petroleum and natural gas, the potential vulnerability of the two
economies to supply disruptions may be viewed by the national governments as an
unacceptable risk, leading both nations to take strong actions to preserve supplies.
One would think that a substantial dependence on imported energy ought to provide strong incentives for both China and India to lead the way on developing new
domestic energy resources. Although there is an interest, China is moving forward
slowly and India barely at all. As things now stand, it appears that the demand for
petroleum in the Chinese and Indian economies will have a major influence on
world oil prices over the next decade. Coal and gas used to generate electricity in
these two nations will contribute a substantial amount of GHG to the atmosphere
and impact climate change. This is yet another reason for the United States to lead
the way by implementing policies that will move us to greener and more sustainable
forms of energy.
11.2 Externalized Costs
Fossil fuel is cheap because of externalized costs. These were explained earlier as
the transfer to taxpayers, society, and future generations of humanity the cost of
impacts to land, water, air, and ecosystems, and destabilization of the global climate. Because this cost is not included in the price paid for fossil energy, it undercuts the economics of every other alternative energy resource in price per Kw
(USEIA 2018). The dependence of society on the fossil fuels that are leading us into
11 Balancing Energy, Environment, and Economics
$11–$12 per MMBtu range, stoking George Mitchell’s interest in shale. Despite the
current high levels of O&G production in the U.S. from shale resources, peak oil is
still a concern. These resources are finite; they will peak and begin to decline sooner
or later. Hydrocarbons from shale should not be treated as the opportunity to continue business as usual, but instead viewed as a holding action to keep things afloat
for a few more years until new, more sustainable and environmentally-friendly
energy resources can be developed and brought online. As a nation, we ignore the
concept of peak oil at our peril.
The decline in U.S. domestic production after peak oil was reached in the 1960s
was replaced by increased amounts of imports, which resulted in the OPEC oil
embargo against the United States in 1973–74 (refer back to Chap. 4). If the
U.S. responds to an anticipated, similar decline in oil production from shale
resources in the next decade or two in the same manner, we are going to quickly
relapse into our addiction to imported oil. Except this time, we will have some stiff
competition.
Both China and India appear to be repeating the U.S. playbook. These two
nations together account for 20% of world oil demand, yet 70% of oil in China is
imported and nearly 80% in India (Slav 2019). China is also importing significant
amounts of natural gas as LNG, and is negotiating the potential development of a
pipeline to bring in Russian gas. As China and India become increasingly industrialized using imported petroleum and natural gas, the potential vulnerability of the two
economies to supply disruptions may be viewed by the national governments as an
unacceptable risk, leading both nations to take strong actions to preserve supplies.
One would think that a substantial dependence on imported energy ought to provide strong incentives for both China and India to lead the way on developing new
domestic energy resources. Although there is an interest, China is moving forward
slowly and India barely at all. As things now stand, it appears that the demand for
petroleum in the Chinese and Indian economies will have a major influence on
world oil prices over the next decade. Coal and gas used to generate electricity in
these two nations will contribute a substantial amount of GHG to the atmosphere
and impact climate change. This is yet another reason for the United States to lead
the way by implementing policies that will move us to greener and more sustainable
forms of energy.
11.2 Externalized Costs
Fossil fuel is cheap because of externalized costs. These were explained earlier as
the transfer to taxpayers, society, and future generations of humanity the cost of
impacts to land, water, air, and ecosystems, and destabilization of the global climate. Because this cost is not included in the price paid for fossil energy, it undercuts the economics of every other alternative energy resource in price per Kw
(USEIA 2018). The dependence of society on the fossil fuels that are leading us into
11 Balancing Energy, Environment, and Economics