Energy independence sure sounds like a winner
Deborah Byers
Retired Partner at EY and Independent Board Member|Energy Transition|Women in Energy
After all, conventional wisdom says achieving energy independence would allow the US to avoid the geopolitical turmoil that roils markets and threatens supply; reduce our reliance on other governments (including some that are unstable or otherwise problematic); and add lots of high-paying, blue-collar jobs.
Since the advent of the domestic shale revolution, pundits and politicians alike have been calling for the US to declare its independence from foreign energy, ramp up domestic production and put a halt to imports. The idea has support from both the right and the left (for different reasons, obviously). And the notion of energy independence certainly gained momentum during the recent presidential election. It was, in fact, a key element in the Trump administration’s platform and in the America First Energy Plan, released 20 January 2017.
With the right mix of increased efficiency and higher output, American energy independence is achievable.
But is that the right path?
For more on what energy independence really means, some of the potential unintended consequences, and the prospect of stronger interdependence, read our first edition of Frontiers – a regular series of thought leadership designed to analyze different energy futures and weak signals impacting the industry.
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The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms
Interdependence of energy supply is a good policy point. This is the market for US LNG exports. Those LNG exports are directly derived from production of Shale Oil. Added value to the production of the oil will lessen the breakeven points The article ignores OPEC as a cartel a bit too much by separating the ME from Africa even though Nigeria, Algeria, and Libya are OPEC members. It also ignores the loaded burden of government on oil prices by cartel members. This is not a direct price issue on the production cost; rather, it is the need issue on the sales price. If consumer is already subsidizing loser technology in the form of ethanol credits to blend to 15% for gasoline. This policy was set before the shale oil revolution. It falls directly into the core issue of burdening consumers needlessly. For focus sake, this is alright, but needs to part of the longer term solution for an American Energy Plan, North American Energy plan, or even a broader Free-Peoples Energy Plan. Three of the drivers for any energy plan should be the longer term goals of limiting the use of non-renewable resources (hydrocarbons, uranium), limiting the release of GH Gases, and the steady market pricing of energy to enable renewable development. Too cheap of hydrocarbons causes the no development of renewables. Too expensive hydrocarbons wrecks the very economy that feeds the money to develop renewables. Thus, the steady pricing of energy is paramount to the transition to full independence, along with the move off of hydrocarbons, and the move to making oil, coal, and natural gas obsolete.
US Energy Independence plan: 1. Import to refine to export is not taxed. Leave it be. 2. All other oil imports (Even from Canada and Mexico) are taxed from the base global pricing point of oil (chose source) to a value of $75. The taxes are provided to the Federal government. 3. US produced oil is not taxed under this scheme beyond current taxes. 4. Canada and Mexico can avoid the import tax by imposing the same tax on all imports to their countries that is not from the US/Mexico/Canada. 5. Invite free-people countries to join under the same provisions. 6. Impose of foreign oil tax on all imported goods from countries not in the free-people global trade alliance. Result: that US/CA/MX production will grow to the point of profitability at $75 per barrel after transport to the refinery. The imports will not immediately stop: the new taxes will provide the US government monies to support renewable energies growth for long term energy independence. The new jobs will increase tax revenue at all levels of government and reduce the benefits needed by lowering the # of unemployed people. Competition will remain in the NA Oil & Gas market to bring further improvement to improve market share and profits. Oil nations like the OPEC cartel members and Russia will need to reform to join the free-people global trade alliance.
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