Michael Lynch is the president and director of global petroleum service at Strategic Energy & Economic Research.
Amid saber-rattling in the Strait of Hormuz, pundits and policymakers are debating whether the U.S. should attack Iran. Just one country over, China announced this week its purchase of the remaining 40 percent stake in a Canadian oil sands project—once again expanding its reach in global energy sources.
Though often buried behind more prominent domestic headlines (e.g., results of the GOP's Iowa caucuses), these international events carry profound consequences for U.S. consumers—influencing the availability and particularly the affordability of the energy on which we rely to literally fuel our economy. And since high energy prices directly impede growth by raising costs to industry and taking money out of consumers' pockets, politicians campaigning this year on a "job creation" platform should also bear in mind that their energy stances can negatively affect those promises.
Yet, recent missteps inside the Beltway continue to undermine U.S. energy security in the global market. Chief among them is the rejection by the Obama administration of Keystone XL, a pipeline that would transport secure Canadian oil to refiners in the U.S. market. Despite several environmental reviews and public consultations, Obama has delayed the project in response to pressure from components of his environmental base, rather than a rational assessment of the risks and benefits.
Natural gas is another area in which government policies stand to have significant impact long-term supply and consumption. Already, shale has become a "game changer." In fact, domestic gas production has grown by nearly 25 percent since 2006, making America the world's top producer. Prices have come down from over $10 three years ago to under $3 per 1,000 cubic feet now, a huge savings for the economy. Yet, regulatory uncertainty still has the power to undercut its potential.
It's a new year, and what better time to rethink our country's energy policies.