The Institute for 21st Century Energy is out with their 2012 study, the Index of Energy Security Risk. While there is a little bit of a silver lining in the report, overall, the United States is headed in the wrong direction when it comes to energy security.
During a conference call this morning, President and CEO of the Institute Karen Harbert, as well as Vice Presidents Stephen Eule and Christopher Guith explained the history of the index and how they look at all aspects of energy security.
According to Harbert, the Institute is an advocate for sensible energy policy. Energy demand will increase around the world by 50% in the next two decades, and by 20% here in the United States in the same time frame. Energy security is intertwined with economic security as well as national security, so it’s a big issue that not too many people are talking about. There’s a great deal of talk about energy independence but you don’t hear much at all about energy security.
The 2012 Index looks at where were are now, where we were in the past, and predictions for the future in energy security, and it goes beyond oil and gas and looks at all forms of energy. The index begins in 1970 and forecasts out to 2035 using 37 complex metrics. The metrics are broken down into four major risk categories:
-Geopolitical
-Economic
-Reliability
-Environmental
As far as the risk number, the lower the better. They use 1980 as the base year, that was the worst year historically with a risk score of 100. The 30 year average between 1970 and 1999 was 84. The score this year is a new high at 101. Thirteen of the metrics they looked at showed increased risk, while twenty one showed decreased risk and three were neutral. According to Eule, this is the third straight year showing an increase in our energy security risk, and we are clearly moving in the wrong direction due to a number of factors:
-High cost and volatility of oil prices
-Energy per household is higher than in 2010
-Crude oil is at a record high
Eule notes that these risks ripple throughout the economy.
There are a few bright spots, especially when it comes to natural gas and shale. Thanks to the natural gas boom, carbon emissions are decreasing, electric prices did not rise as much as expected and natural gas will help to moderate electric prices into the future.
Eule stressed that the natural gas boom is having a positive effect on local economies all over the United States. The first of a three part series of reports came out this week documenting how natural gas has helped the national economy by creating 1.75 million jobs. That number is expected to increase dramatically over the next few years. Last year the industry created 9% of all new jobs. (Imagine what this miserable economy would be like without it.) The boom is happening in states like North Dakota, Ohio, Pennsylvania, West Virginia and Kansas. This year alone royalties and taxes paid by the industry to government amounted to $62 billion, much of that going to state and municipal governments that are in desperate need of new revenue. By 2035 that number is expected to increase to $2.5 trillion.
Wherever this industry is allowed to thrive good things happen to the economy. The industry invested $87 billion this year alone, and those investments are expected to put another $240 billion back into the economy.
I asked how this could impact my state, New York, if only we could start the process here. We’re sitting on a gold mine, but things keep getting pushed back. At this point, it feels like nothing will be done and our state will be left behind on the natural gas boom. I was told to look at all of the jobs created in our neighboring state of Pennsylvania. (The report on the impact on states will come out next month.) It’s true that a few communities in NY’s southern tier already are benefiting from the natural gas boom just by providing services to PA, but they could do so much more if the moratorium is lifted. The speakers on the call said that they haven’t talked to Governor Cuomo directly, but they take him at his word that he is doing his best to get investments flowing in this state while being proactive in protecting the state from expected litigation.
That sounds great, but when our US Senators come out against fracking, and the two progressive candidates in my own district are proposing federal bans on hydrofracking, I think we still have our work cut out for us.
Anyway, the bottom line is, even with this boom in natural gas (that has happened despite President Obama, not because of him) we are still not secure when it comes to energy. In my opinion, it’s time to elect leaders at all levels of government who are committed to energy security. Our lives and livelihoods literally depend on it.
You can find more information on these new studies here, here and here.
Update: The Wall Street Journal just had a big article about the natural gas boom and how it is helping economies in the Rust Belt. New Yorkers should read it before dismissing what could turn into a boom for this state. Even if the jobs don’t materialize down in NYC, the revenue to the state just may save the state and all of those public sector pensions it’s on the hook for.