Hints and nods point to vast energy changes

By Saqib Rahim, Joel Kirkland | 01/13/2016 08:11 AM EST

The energy world has come a long way since President Obama took office in 2009 — whether you consider him responsible for those changes or not.

The energy world has come a long way since President Obama took office in 2009 — whether you consider him responsible for those changes or not.

The last seven years have seen a major Canadian pipeline canceled, a groundbreaking climate deal in Paris and the return of $2-a-gallon gasoline. Solar and wind costs have plummeted, some of coal’s largest corporations have gone bankrupt, and natural gas has become a major factor in shrinking the U.S. carbon footprint.

If you were a time traveler from 2009, you would not recognize the energy world of 2016. Gone are the racking debates about where to find cheap, reliable sources of oil and gas. Fears about overdependence on resources from the Middle East have calmed. An international climate deal seemed laughably quixotic after the 2009 talks; now, there is one.


Energy didn’t take center stage in President Obama’s address last night. But the president did hint at many of the changes that occurred on his watch — and those he’d still like to see. For the time travelers among us: Here’s what you missed.

"Meanwhile, we’ve cut our imports of foreign oil by nearly 60 percent, and cut carbon pollution more than any other country on Earth."

As the George W. Bush administration wound down, public debates on energy continued to swirl around the question of where the United States could possibly find cheap, reliable supplies of oil and gas. The shale revolution transformed that.

Natural gas is abundant: The United States has 84 years of supply at current consumption rates, according to the U.S. Energy Information Administration — and reserves are still growing. This abundance has chopped the price of natural gas by more than half since the month Obama took office, disappointing producers and delighting consumers.

Utilities have scaled up on gas and scaled down on coal, resulting in cuts to U.S. carbon emissions. Last year, for the first time in EIA records, natural gas actually generated more electrons than coal for a full month.

What about oil?

U.S. oil production has risen from about 5 million barrels per day in 2011 to over 9 million bpd in early 2015. Credit Suisse called this a major cause of "the greatest oil production surge in history."

The surge was so great that U.S. refineries weren’t even ready for it. These refineries, ideally designed for imported types of crude, discovered a massive, cheap feedstock and enjoyed a burst of earnings (EnergyWire, June 23, 2015).

"Gas under two bucks a gallon ain’t bad, either."

In 2016, it’s harder to complain about gasoline prices than in 2009. EIA sees gasoline prices averaging $2.03 per gallon this year — that’s not a typo, time travelers — and reaching their seven-year low next month.

Last year, these low prices induced Americans to buy more of their favorite kinds of cars: trucks and SUVs. But this abundance has also had more subtle effects on the public debate about energy: It’s calmed concerns about Middle Eastern oil supply, for instance, and it’s taken the spotlight off the Deepwater Horizon oil spill and the future of offshore drilling.

Obama got a laugh with this punch line, but he didn’t go into the myriad and bizarre factors that have allowed prices to fall this far. Today, the Organization of the Petroleum Exporting Countries is scrambling to maintain market share and is willing to brook $30 oil if necessary. The United States is the world’s third-largest liquids producer, not that far behind Saudi Arabia and Russia, according to the International Energy Agency. And the emerging economies, above all China, aren’t driving demand growth like they used to. A $2.03 sign can’t say all that, but it is an executive summary.

"We’re taking steps to give homeowners the freedom to generate and store their own energy — something environmentalists and tea partiers have teamed up to support."

Tea party activist Debbie Dooley grabbed headlines when she rallied conservatives around an expansion of rooftop solar power in Georgia, taking on the state’s electricity monopoly, Southern Co.

Obama’s reference was a nod to a steady transition away from a heavy reliance on coal-fired generation in the Southeast and industrial Midwest. Rapidly declining costs and increasing deployment of solar panels and wind power have triggered raucous political fights, often pitting powerful utilities against consumers in GOP-led states.

Dooley, co-founder of the Atlanta Tea Party Patriots, became a political sensation in 2013, when tea party activists joined the Sierra Club’s Georgia chapter to press Southern Co. and state lawmakers to allow more solar onto the grid. She took her brand of tea party activism to the state capitals of Arizona and Wisconsin, where similar regulatory battles were playing out.

Last year, Floridians for Solar Choice, an umbrella group of like-minded conservatives and clean energy advocates, together pursued a ballot initiative that would open Florida’s market to rooftop solar. The group includes the Southern Alliance for Clean Energy (SACE) and Conservatives for Energy Freedom, a 501(c)(4) organization started by Dooley.

The saga continues in 2016. Rooftop solar installers SolarCity Corp. and Sunrun Inc. this month started pulling out of Nevada, after the state cut the compensation for solar producers who sell excess power to regional utility NV Energy.

"In fields from Iowa to Texas, wind power is now cheaper than dirtier, conventional power."

This is true, but it’s complicated. Advancing turbine technology has made producing wind power cheaper and more efficient. Still, two of the largest energy markets, Texas and California, struggle at times to balance their electricity markets when too much wind power is being produced during the wrong times of day.

In the West, utilities are talking about developing a regional power market, in part because of the large price swings tied to overproducing wind generation at night, for example.

Iowa has been a Midwest leader in wind power, and that’s been an economic boon. It’s attracted Google and Facebook, which have set up massive data centers powered by Iowa wind farms.

Yet wind and solar suffer from the same problem as they did when Obama moved into the White House. Without some form of advanced energy storage to capture wind and solar power for longer periods, the growth of renewable energy across the nation’s power grid is probably limited. Tens of billions of dollars and years of continued research and development will go into energy storage before it’s widely deployed.