Why is energy so important?
Without energy, almost nothing in your home works. Not your air conditioner, your lights, your computer, your phone, your refrigerator. Not even your car. Nothing.
No business can run without energy either. It is as vital as other economic inputs, such as labor and raw materials. When energy is more affordable, a business can invest in other parts of the business. But when energy becomes less affordable – because of market forces or regulations that restrict production – businesses can’t hire more workers, pay employees more, invest in better equipment, or grow the business.
Over the past few years, we’ve been blessed with an American energy renaissance. Both oil and natural gas production have skyrocketed. Energy imports have declined and the United States is now exporting energy to hungry global markets. This abundance has attracted manufacturing and investment to the United States.
One of America’s greatest strengths is its diverse portfolio of energy resources. In 2016, natural gas is forecasted to provide 33% of electricity, coal 32%, nuclear 19%, renewables 8%, and hydropower 6%. That kind of diversity helps our economy withstand the ups and downs of markets, and ensures that we aren’t overly reliant on one particular resource.
There are loud voices who claim that America is on the wrong track and who seek to limit the varieties of energy we have available. They’re misguided and wrong.
But wait: Why is there a war on American energy?
Instead of embracing all kinds of energy production wherever it makes economic sense and with appropriate environmental protections, energy opponents want government to pick energy winners and losers. They wish we abandoned fossil fuels, “keep it in the ground,” and blindly hope that renewable energy can somehow supply our needs. But that’s simply impossible with an economy and lifestyle that is dependent upon always-available, 24/7 energy.
Listen to the The Business Impact podcast on the value of energy diversity.
President Barack Obama’s administration is doing plenty to help this ill-devised attack on our modern way of life. With oil and natural gas, the Administration has blocked development off the Atlantic Coast, made it nearly impossible to access our resources in the Arctic Ocean, and issued unnecessary regulations to burden onshore federal lands.
The Administration has in particular waged a ruthless “War on Coal.” EPA has launched a series of regulatory attacks on coal-fired power plants – the biggest being EPA’s Clean Power Plan. Through an expansive suite of regulations, the president is doing all he can to make coal (and coal-related jobs) a thing of the past.
Then what’s the argument for more energy development?
First, we get more oil, natural gas, and coal to power our economy.
We’ve seen the benefits from domestic oil and natural gas development—both on and offshore. Because of advanced extraction methods (like fracking), the United States has increased total energy production for six-straight years, despite a 10% decrease in coal production.
With increased domestic oil and natural gas production, U.S. energy security has improved for three years straight, according to the Institute of 21st Century Energy’s Index of U.S. Energy Security Risk, and oil prices have fallen from $110 a barrel in 2014 to under $50 a barrel in 2016. As a result, households have saved $747.30 per year on energy costs between 2008 and 2014.
Second, there are the jobs created through energy production. According to the American Petroleum Institute, oil and natural gas supports 9.8 million jobs, and coal supports over 700,000 jobs, according to the National Mining Association.
Third, we become less dependent on energy from other countries, especially ones that don’t like us. In 2005, the United States imported 30% of its energy demand. That’s now down to below 10%. Because of the shale energy boom, we are now exporting oil and natural gas around the world.
This trend can continue by opening up more areas to energy development and removing unnecessary regulatory barriers to ensure continued access and increased energy security and affordability.
Can we produce energy safely?
We can and we do – every day.
Take oil and natural gas. Despite anti-fracking fear mongers’ protests, propaganda “documentaries,” and millions of dollars spent trying to convince people that hydraulic fracturing is dangerous, neither government nor university researchers have found that it hurts the environment. In the words of an EPA draft report, fracking has not had “widespread, systemic impacts on drinking water.”
Energy companies have every incentive to be mindful of the environment, and regulators at every level enforce regulations and issue permits to ensure energy development is done properly.
What about protecting the environment?
It is being done. Hey, we live here, too. We all want clean air and clear water.
History has shown that economic growth leads to environmental progress. Economic development drives technological progress that allows economies to produce more goods and services with less waste.
With higher incomes from a growing economy, we have more means available to protect the environment. Based on many indicators, our atmosphere is today cleaner when it comes to methane, ozone, and sulfur dioxide (a component of acid rain). Only a vibrant economy can generate the technologies needed to accomplish this.
Affordable energy is required to power that economic growth.
As for climate change, it’s about finding the right policies. Just as the problem is global, a solution must also be global in scope, be realistic and achievable – and not put the United States at a competitive disadvantage. The approach that President Obama’s administration is pushing — EPA’s Clean Power Plan — doesn’t meet any of these criteria.
Is there more to the American energy debate than fossil fuels vs. renewables?
Energy isn’t an either-or proposition. We can continue to use more renewable energy while continuing to enjoy the unique benefits of traditional sources. As our economy continues to grow, we will need more energy from all sources—and so will the rest of the world.
The energy debate must also focus on energy infrastructure. Whether it’s pipelines to move oil and natural gas, electrical power lines to link the parts of the country where power is produced to where its used, or export facilities to sell coal and other fossil fuels to world markets, these projects are more often the target of opponents and regulatory red tape. In 2015, Washington passed legislation to speed up permitting reviews and approvals. That was welcome. It’s up to organizations like the U.S. Chamber to fight groups who will do or say anything to block these needed projects.
We also must not forget the significant contribution of nuclear power, which supplies the United States with 20% of its electricity. One of the big hurdles facing its continuing viability is the federal government’s failure to follow the law and build a permanent nuclear waste storage facility at Nevada’s Yucca Mountain. The government should fulfill its responsibility to ensure nuclear power’s continued reliable and emissions-free contribution.
What’s the bottom line?
American economic growth, job creation, and improved quality of life depend on affordable, abundant energy. We can either import it — often from countries that aren’t friendly with us — or rely on domestic sources.
The energy debate shouldn’t be pro- or anti- any fuel source. It has to promote an “All of the above” approach—and it can’t just be rhetoric. That’s the smart path that ensures households and businesses have the energy they need to keep moving and compete in an increasingly competitive world.