Senate U.S. is 89% energy independent... has broken its addiction to oil(?)

http://www.bloomberg.com/graphics/2014-america-shakes-off-oil-addiction/

We're producing more oil, but we're also consuming a lot less, with demand flat or declining. Gas prices are down. Cars are more fuel efficient. Public transit use is rising, and renewable energy use continues to skyrocket.

The United States seems to have broken its addiction to oil, or at least be on the fast-track towards that goal.

 

Natural gas is conspicuously not mentioned. I wouldn't worry, though. It's not as bad as oil and domestic supply will last centuries.

 

This is one area where I don't mind us pursuing a more mercantilist/self-sufficiency policy. I just hope we continue to work with Canada and other friends with our energy policy. And by friends I don't mean the Saudis.

 

There are positives though Even. The US has put a significant amount of solar energy back into the grid, which should be commended.

 

Was there some technological breakthrough that allowed cars to become more fuel efficient just as the Obama Administration set the new standards, or did we always have the ability to make fuel efficient cars and simply chose not to do so beforehand?

 

Title gore.

 

Define "we"?

 

We as in American carmakers, I guess.

 

In the 90's Clinton raised fuel standards. We even had the electric car(Saturn EV-1 I think it was called). But things went backwards with this drive towards huge SUVs in the 00s.

There are also stories about the Big Three buying up innovative fuel efficiency technology from inventors and then sitting on it for years. I don't know how credible the stories are though. Never looked into it.

 

The things people come up with. Next you'll tell me that GM, Firestone, and Standard Oil conspired to buy up trolley lines and demolish them in order to make people more dependent on cars.

 

So how come the Bush Administration didn't raise fuel standards? Even a Republican president ought to prioritize reducing America's dependence on Middle Eastern oil above their free market zeal or whatever ties they had to Big Oil.

 

LOL! You know about that! That is actually real as you obviously know.

Alpha-Red I think the Bush administration was hell-bent on reversing some things Clinton did because they were more beholden to traditional energy interests as well as just having a different philosophy and set of beliefs.

An aside to this topic: Russia is really hurting due to the drop in oil prices. It will be interesting to see what, if anything, Putin does if his economy continues to decline.

 

Republicans were pushing to drill more domestically rather than regulate fuel efficiency. Something something free market.

 

True. More fuel to feed those SUVs.

 

Russian speakers in Saudi Arabia need protecting by vacationing soldiers who got lost.

 

It seems like the US has broken its dependence, but also pissed off OPEC to the point they're doing a death spiral with the oil prices—which is great in the short term, but long term if they keep tanking oil prices then they're really just cutting their own nose off. I've seen some analysis, but the fracking boom is already making it cheap enough that even with the plunging oil price, it won't kill off production like OPEC hopes. But glad we've righted the ship in energy indepdence although, to use the drug analogy, we seem to have become the dealer. So it's less, 'We got ourselves clean,' and more, 'We stopped using enough to think rationally and stumbled upon a stash we could sell.'

 

Bush did raise fuel standards. The left predictably didn't give him credit (or enough credit) because of all of the bad he had done until that point.

 

Here's to a future were we have electric or hydrogen powered cars and solar or wind as our main source of power.

A guy can dream can't he.

 

Isn't hydrogen electricity a pipe dream?

 

No I don't think so. Honda have produced a working hydrogen cell powered car - the FCX-Clarity. Of course, it's a chicken and egg scenario in terms of infrastructure but the technology itself works fine.

 

Plus, fracking has probably done a lot to aid in the domestic energy situation as well.

 

Yeah, at the cost of leaching extra methane into the atmosphere and (potentially) proprietary mixes of goodness knows what sort of chemicals into the water table. For some reason, the UK is hell bent on going down this road as well...

 

What I learned about energy prices as a peak oil doomer is that energy commodity prices are cyclical like agricultural commodity prices. The prices of corn and wheat bounce up and down in part because growers plant based on a previous season's prices. Prices are high. Growers plant more corn. Prices drop. That's part of the picture. With energy, there's a similar mechanism at work. The major difference is that the periods of the cycles are much longer. Oil producers can't simply plant more oil fields on a whim. An oil field takes decades to produce even though maybe the fracking cycle is shorter than that of developing underwater oil. So the oil supply we're getting now is the result of the record high energy prices we saw before and soon after the great recession - the fruit of decisions that were made nearly a decade ago.

That's the supply side. High oil prices a decade ago sparked a record level of drilling worldwide and pushed the Saudis and other old oil producers to go after extremely expensive secondary and tertiary drilling (enhanced oil recovery) and fracking. So the supply boomlet is coming online now.

But that supply boomlet is now feeding into a somewhat stagnant U.S. economy and a struggling European economy. So a supply boomlet has now run into a U.S. and European demand slump. Consequently, the price of oil is crashing, prompting yet another currency crisis in Russia, and providing inflation relief to a U.S. economy that doesn't need any inflation relief.

What this will likely mean is the decline of the fracking boom. Oil producers will have to start responding to today's oil prices, and so will make decisions that will have a profound effect on the supply of oil 10 years from now. Fracking is an expensive way to get at oil, so fracking businesses will start shutting down as the result of being unable to turn a profit. Supply growth will begin to decline. And 5 or 6 years from now we will have another supply crisis and record oil prices.

Also, if you look at price graphs, this is about the time of year that gas prices start to rebound as refineries start changing their refining mix and building new inventory.

My guess is that the price of oil will bottom out this year or next year at the latest and will begin to rise again to record high levels. Asian demand will continue to pressure supplies, and if the European economy rebounds, that will build demand. Also, if Americans respond to low gas prices by buying gas guzzlers again and driving more miles, that will again put pressure on global supplies.

In general, however, U.S. demand is no longer the driving factor of supplier decision making. We are taking a back seat to China as they become the world's largest energy consumer. The ascendance of the Chinese economy represents a hard medium term floor for oil prices, so we're not going to see a complete collapse to late 90s oil prices at any rate.

 

FTFY