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What Price Will the U.S. Pay for Energy Independence?

Environment  (tags: animals, climate-change, CO2emissions, conservation, destruction, ecosystems, endangered, environment, energy, fossil fuels, globalwarming, government, greenhousegases, habitatdestruction, healthconditions, pollution, protection, Sustainabililty )

- 1849 days ago -
Move over OPEC, North America is about to become a net exporter of oil. At least that's the supposed good news from the International Energy Agency's latest outlook.

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Kit B (276)
Sunday April 28, 2013, 9:09 am
Photo Credit: Living Green Magazine

What Price Will the U.S. Pay for Energy Independence?

Move over OPEC, North America is about to become a net exporter of oil. At least thatís the supposed good news from the International Energy Agencyís latest outlook. According to the IEA, the drilling boom for shale oil is putting US production on track to pass Saudi Arabia. North of the border, output from Albertaís oil sands is expected to notch a similarly grand expansion.

Notions of energy independence, however far fetched they may seem today, play well to the IEAís target audience, which is largely American. Irrespective of the political rhetoric we endured from both presidential candidates, energy independence isnít really the issue confronting the US economy or American motorists. The real problem is the price of oilónot its country of origin.

It doesnít really matter whether the US drills for its own oil, gets it from Canada, or ships it in from Venezuela or the Middle East. Hostile or friendly, no foreign supplier has turned off the spigot. At least not since the last OPEC oil shock three decades ago. The problem for oil consumers right now isnít the availability of the fuel, but the price needed to get it out of the ground. Unfortunately, thatís already more than we can afford.

Brent, the de facto world oil price, is hovering near $110 a barrel precisely because of our growing dependence on the very unconventional sources of supply being championed in the IEA report. Energy independence isnít going to change the reality of triple-digit oil prices. On the contrary, oil prices will have to climb much higher for the IEAís forecast to come true. If thatís the case, does energy independence actually have any value for oil consumers?

The IEA pretends that its prediction for a huge increase in unconventional oil supply can occur with only a modest increase in oil prices. Such unbridled optimism is belied by whatís going on in the industry. Getting oil out of the ground has never been more expensive. And costs are only going up from here. Just look at the pullback in capital spending among oil sands operators. And that says nothing of the lack of pipeline routes coming out of Alberta. Does it really look like bitumen production is about to triple in the next few decades?

Good old-fashioned North American engineering know-how like horizontal drilling, fracking, or steam-assisted gravity drainage (SAGD) isnít why weíre now tapping supply from problematic sources like the oil sands or the Bakken formation. Neither of these are new discoveries. The real heavy lifting thatís catapulted once marginal sources of supply to prominence has been done by soaring global oil prices. Without higher prices, no one would be chasing tight oil from shale formations or trying to pull tar-like bitumen out of the oil sands.

Itís no mystery how rising prices work. Just think about the simple power described by an upward sloping supply curve. The higher the price of oil, the more will be produced. This is a fundamental economic tenet that continually confounds the geologists of the peak oil movement.

By: Jeff Rubin | Transition Voice | Living Green Magazine |

JL A (281)
Sunday April 28, 2013, 9:10 am
Is there an inherent relationship between massive income inequalities, environmental degradation, fewer civil rights and being a net exporter of oil?

Bryna Pizzo (139)
Sunday April 28, 2013, 10:16 am
Thank you for the important post and thanks to JL A. for the astute observation.

Theodore Shayne (56)
Sunday April 28, 2013, 10:22 am
Apart from the Tar Sands which may trickle out in the next five years; most bitumen shale sites don't possess the readily available quantities or have the life expectancy we are told they do. This is just more drivel from the 1st class prevaricators in politics and in the energy industry.

Angelika R (143)
Sunday April 28, 2013, 1:13 pm
At least SOMEONE is pulling of the pink eyeglasses here from many Americans! Thx for posting this Kit, very necessary to spread these facts, facts that have been stated HERE for some time!

Sherri G (128)
Sunday April 28, 2013, 6:15 pm
Thank you Kit excellent article. I just watched a frightening showing of "Fracking Hell" on Link. I attach here a 17 minute presentation via you tube: Highly recommend. Just one fact that stands out is the waste water from fracking is being dumped in New York where the water table is threatened there and in adjoining states. Fracking is now happening in every state and soon will take over Europe. One of the many contents of the fracking waste is Radium plus every ...ene chemical on the periodic chart. Just check out Rifle, Colorado and now Santa Fe, NM. They won't rest until our planet is completely devastated. I will send my submitted story link to friends.

Terry V (30)
Sunday April 28, 2013, 6:51 pm

You've Been Fracked

The Fracking Song


Nikhil Dutta (2)
Sunday April 28, 2013, 7:09 pm
This should have disastrous environmental consequences.

Kit B (276)
Sunday April 28, 2013, 8:06 pm

We are living with the consequences, or trying to, now we have to deal directly with this reality.

Jelica R (144)
Sunday April 28, 2013, 9:13 pm
To sustain a mild economic growth, EROI must be at least 20; meaning that for 20 units of extracted oil only 1 unit of oil might be spent. EROI for tar sands is 5-6, so the real price of tar sands oil is close to $400/barrel. Price of conventional oil is $110/barrel and some experts say that this price is too high to bring recovery in energy-dependent economy. Truth is that oil price has been over $100 for nearly 3 consecutive years, and it would have been even higher without sharp rise in fracking and mountaintop removal.


Kit B (276)
Sunday April 28, 2013, 9:18 pm

Higher still without the US subsidies paid to the Oil companies. Thanks Jelica for that good analysis.

Frances Darcy (133)
Monday April 29, 2013, 1:24 am
Good article.

Darren Woolsey (218)
Monday April 29, 2013, 1:27 am
A bit weary about this one... the supply/demand chain seems to be heavy conditioned by what the mass populations have been brought up to believe they require, rather than what is actually possible and feasible. So, the oil companies in theory win, because of the continuing dominance of oil, whilst there are other technologies, that no one really seems to want to place long term investment in.

Ben O (171)
Monday April 29, 2013, 3:04 am
Well, how about paying twice as much for gas in The U.S. of A? In Sweden (and most of Europe) we do. We also pay CO2 tax, of course...

Past Member (0)
Monday April 29, 2013, 4:44 am
Somewhat simplified analysis, oil prices are a function of both supply and demand, and oil prices would almost certainly be even higher than they are now without the drilling boom over the several years.

TOM T (246)
Monday April 29, 2013, 6:08 am
Noted, Thanks

Craig Pittman (52)
Monday April 29, 2013, 6:58 am
Last time I filled a tank with gas in Britain it was $10.00 per gallon. Perhaps they are closer to the true cost of fuel extraction that we are. From an environmental/social point of view we are paying a terrible price for so-called
oil independence. We seem to be a product of profit/greed and the school of economics that insist continual growth is essential. Well it is certainly essential to those at the top of income/wealth gap.
Thanks for this Kit and to all those who have posted poignant observations here.

Kit B (276)
Monday April 29, 2013, 7:11 am

I do believe that price drives the market and if the US government would end all the subsidies, people would suddenly be paying the cost of drilling (include fracking) and bringing the product to market. Ten dollars a gallon may be low, it might just be more like $15.00, suddenly we would find the bus a more comfortable ride to work.

Jo S (619)
Monday April 29, 2013, 8:02 am
Great, very informative article. Thanks for bringing it to our attention Kit. It won't be long before we wont be able to afford to get to work never mind anyplace else!
Noted & shared.

David C (131)
Monday April 29, 2013, 2:14 pm
unfortunately, can't put a price on health and well-being for all life and the world.....greed kills

Birgit W (160)
Monday April 29, 2013, 2:17 pm
Good question!

Azure Wildflowers (0)
Monday April 29, 2013, 3:58 pm

Kit B (276)
Monday April 29, 2013, 4:53 pm

I most certainly hope that this miserable XL pipeline is the last straw for the American people.

Christine Stewart (134)
Monday April 29, 2013, 5:54 pm
We are so foolish to have this pipeline running through our country. We should embrace rooftop solar, or solar arrays that would provide shaded parking in every mall parking lot. Instead of acres of overheated asphalt, there would be plentiful electricity.

Paulett Simunich (0)
Monday April 29, 2013, 7:09 pm
Thank you Kit ! Cannot add to what has already been said.... Pass this info on !!!

Jelica R (144)
Monday April 29, 2013, 8:33 pm
WildEarth Guardians, petition:

Speak out to Protect the Rocky Mountains from Dirty Energy

The U.S. Forest Service wants to let the coal industry invade one of Coloradoís treasured forest roadless areas. Send a letter today calling on the Obama Administration to keep our forests safe from dirty energy.

Lin Penrose (92)
Tuesday April 30, 2013, 1:27 pm
Thank you Kit. Fracking and all the accessories, including human demand for oil, and consumption are incredibly stupid and selfish beyond belief.

Klaus Peters (14)
Saturday May 11, 2013, 9:53 am
Sorry, American big oil is on a death spiral, wanting to tap the Arctic, wars in the Middle East, but they have tunnel vision about any new alternative GREEN power. Over the years American oil has blocked and paid out many inventions that were going green. People ARE waking up. With the demise of big oil we will also see the demise of Islam oil power.
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