The 5 Biggest Energy Changes in the Past Six Years

TAFT, CA - JULY 22: Oil rigs just south of town extract crude for Chevron at sunrise on July 22, 2008 in Taft, California. Hemmed in by the richest oil fields in California, the oil town of 6,700 with a stagnant economy and little room to expand has hatched an ambitious plan to annex vast expanses of land reaching eastward to Interstate 5, 18 miles away, and taking over various poor unincorporated communities to triple its population to around 20,000. With the price as light sweet crude at record high prices, Chevron and other companies are scrambling to drill new wells and reopen old wells once considered unprofitable. The renewed profits for oil men of Kern County, where more than 75 percent of all the oil produced in California flows, do not directly translate increased revenue for Taft. The Taft town council wants to cash in on the new oil boom with increased tax revenues from a NASCAR track and future developments near the freeway. In an earlier oil boom era, Taft was the site of the 1910 Lakeside Gusher, the biggest oil gusher ever seen in the US, which sent 100,000 barrels a day into a lake of crude. (Photo by David McNew/Getty Images)
National Journal
Amy Harder
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Amy Harder
Feb. 9, 2014, 7:42 a.m.

In 2008, Wash­ing­ton was grap­pling with what it thought was a scarce sup­ply of oil and nat­ur­al gas, en­ergy prices were high, pres­id­en­tial can­did­ates of all stripes em­braced ac­tion on glob­al warm­ing, and Pres­id­ent Obama was rid­ing to vic­tory on his slo­gan of change you can be­lieve in.

Today, six years later, who would have thought this much change would come to the en­ergy and cli­mate world this fast? Here are the biggest changes over the past six years.

Amer­ica’s oil and nat­ur­al-gas boom. Amer­ica was at the be­gin­ning of its oil and nat­ur­al-gas boom in 2008, but that news hadn’t reached Wash­ing­ton yet. Over the past six years, oil pro­duc­tion has ris­en by at least 45 per­cent, ac­cord­ing to gov­ern­ment data, and oth­er es­tim­ates have it closer to 60 per­cent. Nat­ur­al-gas pro­duc­tion has gone up 22 per­cent. The In­ter­na­tion­al En­ergy Agency pre­dicts the U.S. will sur­pass Saudi Ar­a­bia as the world’s biggest oil pro­du­cer in 2015; and the En­ergy In­form­a­tion Ad­min­is­tra­tion says we’ve sur­passed Rus­sia as the biggest nat­ur­al-gas pro­du­cer. Between 2008 (be­fore that Septem­ber’s eco­nom­ic crash) and 2013, nat­ur­al-gas prices dropped al­most 60 per­cent. Even after the crash to­ward the end of 2008, nat­ur­al-gas prices were still 40 per­cent high­er than they were at the end of 2013, ac­cord­ing to EIA’s 2014 out­look. Oil (and gas­ol­ine) prices are high­er than they were in 2008, but en­ergy ana­lysts cred­it the bal­loon­ing oil pro­duc­tion in North Dakota and Texas for why prices have been more stable and lower than they would be oth­er­wise, even while the eco­nomy im­proves.     (Joey Car­olino)

This boom has had eco­nom­ic, polit­ic­al, and en­vir­on­ment­al ripple ef­fects throughout the United States and the rest of the world. Most im­port­antly for Obama over his pres­id­ency so far, the boom has en­abled him to en­act tough­er en­vir­on­ment­al rules, use lever­age in geo­pol­it­ic­al ne­go­ti­ations — such as those in­volving Ir­a­ni­an oil sanc­tions — and tout pro­gress on com­bat­ing cli­mate change, even if in the long run it’s not a clear suc­cess.

The rise of EPA and the fall of cli­mate-friendly Re­pub­lic­ans. From the death of com­pre­hens­ive cli­mate le­gis­la­tion in 2010 came the rise of the En­vir­on­ment­al Pro­tec­tion Agency’s di­vis­ive role in lead­ing Obama’s cli­mate agenda. The threat of EPA’s Su­preme Court-com­pelled plans to reg­u­late car­bon emis­sions were sup­posed to be the stick to prod Con­gress to act on cli­mate, but in­stead EPA ended up be­ing one of many obstacles to a cli­mate bill (the BP oil spill in 2010 was an­oth­er big one). Today, that threat is be­com­ing a real­ity. Not co­in­cid­ent­ally, the last six years have also seen the near ex­tinc­tion of Re­pub­lic­ans who openly ac­know­ledge glob­al warm­ing is real and ad­voc­ate for ac­tion. Many factors com­pelled this trend, but the threat of EPA played a role by gal­van­iz­ing Re­pub­lic­ans and coal-state Demo­crats around a com­mon en­emy, in­stead of a com­mon goal.

En­vir­on­ment­al move­ment flip­ping from top down to bot­tom up. In 2008, en­vir­on­ment­al­ists were gal­van­iz­ing around Obama’s com­mit­ment to pass com­pre­hens­ive cli­mate-change le­gis­la­tion in Con­gress. En­vir­on­ment­al­ists were so com­mit­ted to this top-down ap­proach they barely no­ticed when the Obama ad­min­is­tra­tion ap­proved in 2009 a pipeline send­ing Ca­na­dian oil sands across the bor­der to Wis­con­sin. This pipeline is much short­er than Key­stone (330 U.S. miles, com­pared with Key­stone’s 1,300 U.S. miles). But the ba­sic premise of send­ing car­bon-heavy oil sands in­to the U.S. is the same. By sum­mer 2010, com­pre­hens­ive cli­mate le­gis­la­tion was dead, and the top-down ap­proach by the United Na­tions had stalled on the in­ter­na­tion­al front. The en­vir­on­ment­al move­ment began search­ing for something else to rally around, and they found plenty: the Key­stone XL pipeline, frack­ing, and fossil-fuel ex­port ter­min­als. To be sure, en­vir­on­ment­al­ists sup­port EPA’s plans to reg­u­late car­bon emis­sions, but this ef­fort doesn’t have the ral­ly­ing ap­peal in­di­vidu­al pro­jects do.

Im­ports and ex­ports of fossil fuels. It’s hard to put in­to words the dra­mat­ic rise in ex­ports across the fossil-fuel board. But let’s give it a try. Be­cause the gov­ern­ment bans most ex­ports of crude oil, ex­ports of products re­fined from oil — like dies­el, gas­ol­ine, and jet fuel — have in­creased more than 60 per­cent since 2008. Com­pan­ies are also mak­ing the most of the ban’s few ex­cep­tions, which in­cludes Canada. Crude-oil ex­ports, mostly to our north­ern neigh­bor, in­creased 262 per­cent since 2008. It’s a start­ling rise per­cent­age-wise, but ob­ject­ively the num­bers are small. Last year (ex­clud­ing Decem­ber, whose num­bers aren’t out yet) the U.S. only ex­por­ted about 40 mil­lion bar­rels of oil, com­pared with the roughly 2.5 bil­lion bar­rels of oil we pro­duced last year.     (Joey Car­olino)

Mean­while, EIA pre­dicts the U.S. will im­port just 28 per­cent of its oil this year, com­pared with al­most 60 per­cent in 2008. Nat­ur­al-gas ex­ports, which the gov­ern­ment re­stricts but not as severely as crude oil, have gone up 50 per­cent since 2008. Ex­ports of coal, a car­bon-heavy re­source fa­cing a one-two punch from cheap­er, clean­er nat­ur­al gas and tough­er en­vir­on­ment­al rules, have ris­en 32 per­cent over the last six years. Like with many eco­nom­ic trends, Wash­ing­ton is be­hind and play­ing catch-up to what these ex­ports mean to the coun­try and what, if any­thing, it should do about them.

Re­new­able-en­ergy growth, which is ob­ject­ively sig­ni­fic­ant but still re­l­at­ively small. Obama poured some $90 bil­lion in­to clean-en­ergy in­cent­ives as part of the stim­u­lus bill he signed in­to law shortly after be­com­ing pres­id­ent. That was sup­posed to be the down pay­ment that a con­gres­sion­ally man­dated price on car­bon would sus­tain in­def­in­itely. That ef­fort didn’t hap­pen, of course, but re­new­able en­ergy is still grow­ing thanks to state policies, tax in­cent­ives, and gradu­ally cheap­er tech­no­logy costs. The elec­tri­city sec­tor’s use of re­new­able en­ergy has in­creased more than 25 per­cent since 2008, but today it still only makes up 12 per­cent of the elec­tri­city pie (more than half of that comes from hy­dro­elec­tri­city). By 2040, re­new­ables will still ac­count for just 16 per­cent of the mix, ac­cord­ing to EIA.

Six years is a just a mo­ment in the en­ergy and en­vir­on­ment world, but it’s cer­tainly been a trans­form­at­ive mo­ment. What will the next six years hold?

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