The Senate Energy and Natural Resources Committee reviewed energy supplies, global market shifts and potential vulnerability to oil disruptions that may affect U.S. energy in the coming year.
“The conventional wisdom is that this Congress cannot accomplish any major legislation now that we are full on in the election year, but that doesn’t mean that the rest of the energy world will be grinding to our halt,” said Sen. Lisa Murkowski, R-Alaska.
The U.S. Energy Information Administration testified in the hearing that U.S. natural gas production is amidst a “great revival,” and likely to exceed domestic consumption over the next decade.
Just last week, President Barack Obama said in his State of the Union address that “nowhere is the promise of innovation greater than in American-made energy.”
Similarly, EIA reports show total U.S. energy-related carbon dioxide emissions will remain below their 2005 level through 2035. Energy efficiency is expected to develop and increase economic growth well into the future, the report said.
Still, Cambridge Energy Research Associates reports that, allowing for inflation, oil reached its highest average annual price last year since the 1860s.
This may be the result of economic and geopolitical instability in many key oil-producing nations — a potential threat to the boomlet in U.S. energy production.
Some of the rebellions resulted in new governments taking charge in oil-producing countries in 2011, directly affecting the relationship between the U.S. and global energy markets.
The Arab Spring dramatically shifted power in parts of the Middle East and North Africa.
Sen. Jeff Bingaman, D-N.M., said in the hearing that OPEC member Libya’s oil production and exports were nearly stagnant during the country’s civil war last year. Now that the Libyan oil market is almost fully restored, the U.S. must shift its attention to Iran, he said.
The U.S. has long-standing sanctions against the Iran due to concerns the country may be developing nuclear weapons. But the nation remains a chief source of oil for Europe and Asia.
Now, Europe is moving toward its own sanctions against Iran. As a result, Bingaman said “we can anticipate some dislocation in crude oil flows as the world adjusts to this new situation.” This “dislocation” means uncertainty in future oil prices.
Another factor that may dramatically influence American energy policy in the future is the lingering possibility that the Keystone XL pipeline will be built, sending more oil flowing into the U.S. from Canada. The pipeline project has become a partisan political football.
Although the Obama administration has refused to issue permits for the project, the Canadian oil company will soon be able to reapply. If the pipeline system is eventually approved, the Cambridge research group said that there would be greater stability in U.S. oil sources and growth of supply.
Murkowski said that such stability is essential for the U.S. to keep up with continuously changing energy patterns and technology.
“The U.S. still really does matter in terms of influencing world energy trends and truly determining our own fate. If an emergency or disaster does occur, there’s a strong likelihood that the rest of the world will look to us for leadership,” Murkowski said. “And we’ve got to be ready for that.”