America's energy future ultimately lies in the hands of our policy makers.
With mid-term congressional elections to be held later this year, the American Petroleum Institute -- the nation's foremost oil and gas trade group -- has kick started a campaign to elect candidates who support energy independence and security for the United States.
In his annual State of American Energy address, API President and CEO Jack Gerard passionately urged that America should not pass up this "once in a lifetime opportunity" of moving "toward global energy leadership."
No room for disagreement
There's hardly anything one could disagree about with regards to Gerard's address. He stressed upon the fact that "energy is one of the few issues that can unite us, and is viewed by a majority of the public as a shared responsibility rather than just another skirmish in the ongoing political battles in Washington and state capitols..." That statement alone should raise the level of respect for Gerard.
Not surprisingly, Gerard wasn't simply about rhetoric or nor was he putting his foot in the mouth. Instead, he backed up his arguments with sound facts. Here are some compelling arguments that he put forth:
A generation later: Still a major growth driver
Quoting the Energy Information Administration, Gerard mentions that oil and natural gas will still be responsible for meeting 60% of the nation's energy need 25 years from now. Additionally, these fossil fuels will still constitute more than 90% of transportation fuel in the United States. Whether the nation's vast energy resources could be harnessed to meet the huge demand is only a matter of choice.
ExxonMobil (NYSE:XOM) predicts that by 2040, oil and gas will supply 60% of global energy demand -- up from 55% in 2010. The world's largest investor-owned oil and gas company predicts total liquids demand to rise to 113 million barrels per day of oil equivalent (MBDOE) in 2040, a whopping 3% increase from 2010 -- thanks to unconventional drilling. The following chart gives a clear breakdown of how liquids supply will shoot up by 2040:
Hydraulic fracturing: The engine driving growth
Speaking about unconventional drilling in the form of hydraulic fracturing, Gerard pointed out that North Dakota produced more than 1 million barrels of oil equivalent per day in 2013, and would by itself rank among the top 20 oil producers of the world. Companies such as Kodiak Oil and Gas (UNKNOWN:KOG.DL), and Continental Resources (NYSE:CLR) have solidly exploited the Bakken Shale play and are on course to book higher profits. EOG Resources (NYSE:EOG), on the other hand, has a solid position in the premier Eagle Ford Shale play, and is widely regarded as the best oil stock in America right now. These companies, along with others, have done much in putting America on the world energy map.
Gerard's statements are extremely well supported with the International Energy Agency predicting that the United States will ride its booming shale output to surpass Russia and Saudi Arabia as the world's top oil producer by 2015. The Paris-based agency expects the U.S to produce 11.6 million barrels of oil per day in 2020, up from 9.2 million barrels a day in 2012.
He also points out that carbon dioxide emissions are the lowest in 20 years, thanks to a plentiful supply of clean burning natural gas. And this abundance has been made possible mainly because of "innovations in hydraulic fracturing." Which is why, one can't help but see through the arguments put forth against "fracking" citing environmental issues.
The economy: Why you can't ignore oil and gas
However, Gerard's comments on how oil and gas spending will stimulate the economy take the cake. Quoting a study by IHS Global, he makes a clear case on how jobs are directly related to spending. A $95 billion investment in the oil and gas industry would contribute as much as $121 billion to the U.S. gross domestic product, supporting a whopping 1.15 million jobs in the process. Additionally, the government could rake in revenues of $27.5 billion annually, between 2014 and 2025.
Foolish bottom line
With an overwhelming 92% of the voting public agreeing that "increased production of domestic oil and natural gas resources could lead to more jobs in the U.S.", Gerard correctly points out that simply a "dogmatic adherence to political ideology can trump economic reality to the detriment of millions of hard-working middle class families".
Will the mid-term elections see a major breakthrough in how energy policies are enacted henceforth? Sound off below.