The outlook for the U.S. energy supply is very different from what it was just four years ago, the last time oil prices were going up -- and the last time Americans were electing a president. Back then, it seemed the only questions were how fast oil imports would continue to rise and whether the United States was destined to import increasing amounts of natural gas. But the years since have seen an astonishing revival in U.S. oil and gas production, and with it a change in the national conversation about energy. In the presidential campaign ahead, the debate over America's energy policy is likely to be very different from years past.
The FP Survey on energy, which sounded the views of 57 experts, demonstrates just how much the debate is already changing. "Energy independence," a chimera invoked by every U.S. president since 1973, has now become a serious subject for discussion. But nearly two-thirds of FP's respondents do not think that the United States will be energy independent or that independence is a sensible goal in the first place. As one wrote, "Unless the United States wishes to adopt the economic policies of the former Soviet Union, the U.S. economy will always be linked to global markets for oil."
Even without energy independence, the growth in the North American supply will have enormous geopolitical ramifications -- not necessarily immediately, but over time -- according to the respondents. The top three consequences they listed are "less U.S. reliance on and influence in the Middle East," "diminished U.S. interest in combating climate change," and "less European reliance on Russian gas" (presumably because of newly tapped supplies of shale gas).
Another major story is the changing picture of global demand. Oil consumption may be destined to continue to rise in emerging markets, but not in the traditional major consumers. U.S. oil demand, in fact, is down about 10 percent since 2005. Simply put, the United States and other developed countries have hit "peak demand." An overwhelming share of respondents are convinced this is mainly a lasting structural change -- the product of more efficient automobiles and shifting demographics -- though, as one noted, it is "exacerbated by recession."
Over the past few years, governments have heavily promoted renewable energy sources such as solar and wind. The FP Survey respondents believe renewables will grow dramatically as a percentage of U.S. energy consumption -- nearly tripling by 2030. Wind energy alone will grow fivefold, they suggest, while solar energy will grow an astonishing 30-fold. But renewables are still growing from a very small base. Thus, by 2030, the respondents estimate, oil, natural gas, and coal will still account for 69 percent of U.S. energy, compared with 82 percent in 2011. Natural gas will gain markets, while coal will experience the steepest relative drop in market share.
How does the United States fit into the global picture? After all, the real growth in consumption is taking place in emerging markets. China already consumes more energy (not to be confused with just oil) than the United States. In the conclusion to The Quest, I offer a view of the future that comes in two parts. First, based on what is known and can be foreseen today, global energy demand will increase about 35 percent over the next two decades. Second, while renewables will grow in absolute terms, so will conventional energy, owing to the continuing surge in coal, oil, and natural gas consumption in emerging markets like China. Thus, on a worldwide basis, the mix in energy demand will not be too different from what it is today. The real changes in the composition will come after 2030.
Foreign Policy put that view to the respondents, and more than three-quarters agreed. But some highlight the uncertainty: "It totally depends on global action on climate," one said. Another wrote, "Agree on total demand but disagree on the mix. I think total hydrocarbon demand will be lower."
Shale gas, in terms of its impact, may well be the biggest innovation in energy supply in the last two decades. Although initially cheered by many environmentalists as providing more of an alternative to coal, it has become controversial because of questions about how it is produced. Yet it is already 37 percent of U.S. natural gas production, up from just 2 percent at the beginning of the last decade, and virtually all respondents expect it to continue to increase. The question is by how much. The top shale gas environmental issue, by far, is considered to be water impacts, followed by methane leakage, according to respondents. But nearly three-quarters are convinced environmental issues can be managed "so that shale gas production can continue on its growth track."