So many of the biggest global and national events are unpredictable. The Soviet Union imploded and the Iron Curtain fell without U.S. intelligence services having a clue it was imminent. Digital technologies were unleashed and decimated dozens of industries, including travel agencies, physical music sales, brick-and-mortar retailers, and print media. Social attitudes and laws pertaining to gay marriage and legalized marijuana changed within a matter of years.
Now, energy independence, once a far-flung aspiration — particularly for those who remember the heyday of OPEC and the 1970 energy crisis with its long gas lines — is within reach. Thirty-five years of declining U.S. oil production came to an end in 2006, after bottoming out at 5.2 million barrels per day in 2005, from a high of 9.6 million barrels per day in 1970. In March, the U.S. Energy Information Administration reported U.S. crude oil production had reached 10.4 million barrels per day, a far cry from the 13 million barrels per day the country used to import to meet its needs.
For many years, the fossil-fuel industry has known about the oil and natural gas trapped in shale formations around the country, but it was not until hydraulic-fracturing technology, more often referred to as “fracking,” that the trapped booty could be broken free at an affordable cost. This technological breakthrough has created such a prolific outpouring of oil and gas that in 2016, Congress and the Obama administration lifted a 40-year ban on oil exports, an action that seemed unthinkable before the boom in U.S. oil production.
Add to that flat U.S. electricity demand — despite a growing economy — because of weatherization, conservation, and regulations that require new lighting systems and appliances be manufactured to energy-efficient standards. It gets even better. A precipitous decline in the cost of renewable-energy technologies is taking pressure off oil and gas demand; it has also undercut the price of coal, the dirtiest member of the fossil-fuel family.
Not surprisingly, California this year became the first state to require solar panels be installed on all new-home construction. Think in terms of turning every structure into its own power-generation plant. Think about the widespread creation of microgrids that offer a more durable and locally shared system of power storage and distribution. Imagine a day when the failure of a regional or national electric grid does not result in power outages and blackouts.
Perhaps surprisingly, Texas, the fossil-fuel capital of the country’s 50 states, is also the No. 1 producer of renewable energy. Rather than protect its old-line fossil-fuel interests, Texas has promoted a pro-business, pro-energy agenda that offers untrammeled access to all forms of power production, so oil and gas boom in the Lone Star state even as renewables do the same. Texas is especially big on wind power, which the United States produces more of than solar — again, a surprise to many people because solar tends to be more visible and garner more attention. But it is hydroelectric plants that produce the largest share of renewable energy, accounting for 6.5 percent of the country’s total electricity supply and 43.6 percent of the renewable energy pie.
When you think about it, punching holes in the earth’s crust to tap the richest of Mother Nature’s bloodstreams is a pretty old and crude technology. Though advances, such as fracking, have been brought to market, it has long seemed that other industries have made far greater and faster technological advances. Renewables offer a path beyond fossil fuels in the long run, and are being pushed hard by the United States, China and Germany because they see a new industry worth hundreds of billions. Wind power and solar are technologies all countries are anxious to share, both because of the profit motive and the possibility it could sharply improve overall human and environmental health. The opportunity to avert warfare also exists. When all nations can generate an adequate supply of homegrown power, it eliminates the kind of land grabs we have seen from nations anxious to capture others’ oil reserves, or to assure access to the energy they need to remain viable or prosperous.
None of this takes into account a major innovation that brings to bear an entirely new form of energy, such as nuclear fusion, which domestic and foreign energy labs are working to harness, in part through the use of lasers aiming to trigger a fusion reaction and replicate the same forces that power the sun. It’s a technology that promises to create clean, radiation-free nuclear energy in grand abundance.
Other research projects, such as hydrogen-based forms of power production, also are afoot. Breakthroughs are inevitable, and our global energy needs are so great that new innovations will not necessarily disrupt existing forms. The exception, naturally, is the desire to drastically reduce the burning of fossil fuels, for the same reasons we were happy to graduate past burning wood for warmth. Cleaner, less-exhaustible and more-egalitarian energy alternatives advance our prosperity, health and opportunities for realizing a less militaristic world.
It might seem far off now but, as I said at the top of this column, when change comes, it often comes unexpectedly fast.
Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.