Energy Revolution 2: A Post Post-American Post

[raider.adam]

Energy Revolution 2: A Post Post-American Post | Via Meadia

Forget peak oil; forget the Middle East. The energy revolution of the 21st century isn’t about solar energy or wind power and the “scramble for oil” isn’t going to drive global politics. The energy abundance that helped propel the United States to global leadership in the 19th and 2oth centuries is back; if the energy revolution now taking shape lives up to its full potential, we are headed into a new century in which the location of the world’s energy resources and the structure of the world’s energy trade support American affluence at home and power abroad.

Reports of America's death have been greatly exaggerated.

[MariusPontmercy]

Energy Revolution 2: A Post Post-American Post | Via Meadia



Reports of America's death have been greatly exaggerated.

So as older supplies dry up we'll be able to replace them with new sources, but how much does productivity increase overall, and for how long given demand increases? The US may be better positioned for the future, but at the very least I think the era of cheap oil is over. Non-traditional methods of oil extraction are inherently more expensive as well as energy intensive.

I think the problem people fall into is that they think all those reserves can be tapped into and put onto the market now. They can't. They'll be brought in slowly, expensively, and probably at a rate that keeps pace with declines elsewhere. Does it change the way the US is positioned globally? Certainly, but it would be a mistake to fall into old habits developed from when fossil fuels were cheap lest we repeat the same problems we've had again down the road. Might be a hundred years down the road, but it would still be awfully selfish.

[raider.adam]

So as older supplies dry up we'll be able to replace them with new sources, but how much does productivity increase overall, and for how long given demand increases? The US may be better positioned for the future, but at the very least I think the era of cheap oil is over. Non-traditional methods of oil extraction are inherently more expensive as well as energy intensive.

I think the problem people fall into is that they think all those reserves can be tapped into and put onto the market now. They can't. They'll be brought in slowly, expensively, and probably at a rate that keeps pace with declines elsewhere. Does it change the way the US is positioned globally? Certainly, but it would be a mistake to fall into old habits developed from when fossil fuels were cheap lest we repeat the same problems we've had again down the road. Might be a hundred years down the road, but it would still be awfully selfish.

Well just on the natural gas part of it, we are bringing a lot of those resources online right now. Oil production increases aren't 100 years away. Probably more like 10.

And "cheap oil" is relative. I think the point is that hydrocarbon based energy is still probably going to be cheaper than things like solar for the foreseeable future. At some point technology will also catch up for solar and the price points will shift. Of course at that point it just means more and more we will export to developing countries that it will still be cheaper to run carbon based energy.

Overall, the main point is, America can very possibly be at the front of the energy market (with alternative fuels and carbon based) for a long time... which is a good thing for America's influence and the stability of the global economy. As the author pointed out, no other government has been as stable (from internal and external influences) in the last century as the American government. The lynchpin of energy in the world being focused on a free and market based economy is a good thing.

[OffenseTaken]

So I guess I'll stop working on my sequel to 1066 and All That, for now.

Mead seems to have this childishly naïve assumption that we can just slowly retrofit our manufacturing sector into the resource-exporting business, and thus remain Top Nation.

This is has never gone well. Norway has been by far the most successful nation in avoiding the curse of resource exporters: specifically, that they are some of the most unpleasant countries to live in. The Norwegians have done so mainly by keeping their manufacturing in a Mad Men era of self-sustaining national economies (to the point, of course, where they've even stayed out of the EU), while other sectors are exposed to all the hazards of the current century. Even Norwegians are getting tired of it, and have been moving in a steady direction of liberalization for fifteen years.*

Mead seems to be aware of the problem of currency in rich resource-exporting countries, i.e. how you sell other goods when extraction industries are driving the value of the currency ever upward. (Again, Norway—with one of the highest-valued currencies in the world—avoided this by tailoring its manufacturing to the domestic market.) As far as blue-collar workers are concerned, he thinks this can be solved simply by getting out of one set of coveralls and into another.

So why didn't Dutch factory workers (who used to rival the Germans for being the highest-paid and best-educated in the world) just go work for Shell on an offshore platform? Why doesn't every laid-off widget-factory worker outside Toronto or Montreal just move to northern Alberta? First of all, yuck. But the main reason is that extractions don't employ nearly as many people, and have not for more than a century. For other manufacturers-cum-resource exporters, it's been a "jobs revolution" indeed: a monumentally sh¡tty one. When Mead writes of "substantial growth of high-income jobs for skilled blue collar workers," it's just fuzzy math, nothing more.

I don't think I'm being just a contrarian counterweight to Mead's relentless cheerleading, when I say there's reason to suspect the US is far more vulnerable to the curse of resource exporters than any of the countries I've mentioned—that, in other words, it may very well become "the Nigeria or the Russia of the new century." Why not? We're less protectionist than Holland was in the 1970's, which could lead to a faster, more thorough collapse of what remains of our manufacturing sector; workers will lose their jobs at a faster rate than extraction industries will hire even a fifth of them. We're certainly not Norway, either, and what little we've seen from Canada's more recent forays into oil and gas has not been encouraging at all.

Mead seems to think he can drum up all kinds of enthusiasm for this state of affairs, if it lets us hold on to "We're Number 1!" bragging rights. I don't think it's worth it. I haven't even mentioned the concerns for the environment, because I thought those were more obvious.

*Of course, it helps that Norway was already one of the world's richest countries when oil exploration started; that it's long had one of the world's highest rates of political participation; and that it has one of the cleanest, most responsive governments anywhere. This has ensured that nationalization of the petroleum industry hasn't led instantly to corruption, as it does everywhere else where it's been tried.

Overall, the main point is, America can very possibly be at the front of the energy market (with alternative fuels and carbon based) for a long time... which is a good thing for America's influence and the stability of the global economy. As the author pointed out, no other government has been as stable (from internal and external influences) in the last century as the American government. The lynchpin of energy in the world being focused on a free and market based economy is a good thing.

Is it better for the world's energy market if United States supplies more of it, and Saudi Arabia less? Gosh yes. But it's only good news for this country, insofar as it's good news for everyone.

[geoffrobinson]

I don't think the surge in natural gas and oil in this country will translate as mere energy exports. There will be some of that. But a lot of that natural gas become incredibly cheap feedstock for our petrochemical companies and cheap energy for our manufacturers. And energy that does get exported becomes a smaller trade deficit. This is an unmitigated good thing from what I've seen.

[raider.adam]

So I guess I'll stop working on my sequel to 1066 and All That, for now.

Mead seems to have this childishly naïve assumption that we can just slowly retrofit our manufacturing sector into the resource-exporting business, and thus remain Top Nation.

This is has never gone well. Norway has been by far the most successful nation in avoiding the curse of resource exporters: specifically, that they are some of the most unpleasant countries to live in. The Norwegians have done so mainly by keeping their manufacturing in a Mad Men era of self-sustaining national economies (to the point, of course, where they've even stayed out of the EU), while other sectors are exposed to all the hazards of the current century. Even Norwegians are getting tired of it, and have been moving in a steady direction of liberalization for fifteen years.*

Mead seems to be aware of the problem of currency in rich resource-exporting countries, i.e. how you sell other goods when extraction industries are driving the value of the currency ever upward. (Again, Norway—with one of the highest-valued currencies in the world—avoided this by tailoring its manufacturing to the domestic market.) As far as blue-collar workers are concerned, he thinks this can be solved simply by getting out of one set of coveralls and into another.

So why didn't Dutch factory workers (who used to rival the Germans for being the highest-paid and best-educated in the world) just go work for Shell on an offshore platform? Why doesn't every laid-off widget-factory worker outside Toronto or Montreal just move to northern Alberta? First of all, yuck. But the main reason is that extractions don't employ nearly as many people, and have not for more than a century. For other manufacturers-cum-resource exporters, it's been a "jobs revolution" indeed: a monumentally sh¡tty one. When Mead writes of "substantial growth of high-income jobs for skilled blue collar workers," it's just fuzzy math, nothing more.

I don't think I'm being just a contrarian counterweight to Mead's relentless cheerleading, when I say there's reason to suspect the US is far more vulnerable to the curse of resource exporters than any of the countries I've mentioned—that, in other words, it may very well become "the Nigeria or the Russia of the new century." Why not? We're less protectionist than Holland was in the 1970's, which could lead to a faster, more thorough collapse of what remains of our manufacturing sector; workers will lose their jobs at a faster rate than extraction industries will hire even a fifth of them. We're certainly not Norway, either, and what little we've seen from Canada's more recent forays into oil and gas has not been encouraging at all.

Mead seems to think he can drum up all kinds of enthusiasm for this state of affairs, if it lets us hold on to "We're Number 1!" bragging rights. I don't think it's worth it. I haven't even mentioned the concerns for the environment, because I thought those were more obvious.

*Of course, it helps that Norway was already one of the world's richest countries when oil exploration started; that it's long had one of the world's highest rates of political participation; and that it has one of the cleanest, most responsive governments anywhere. This has ensured that nationalization of the petroleum industry hasn't led instantly to corruption, as it does everywhere else where it's been tried.



Is it better for the world's energy market if United States supplies more of it, and Saudi Arabia less? Gosh yes. But it's only good news for this country, insofar as it's good news for everyone.

Mead makes specific reference to America's earlier energy boom and the reason America fared so well is because the American economy was so diverse. He alludes that it is important that America still shouldn't be a one trick pony and an energy oriented economy.

[OffenseTaken]

Mead makes specific reference to America's earlier energy boom and the reason America fared so well is because the American economy was so diverse. He alludes that it is important that America still shouldn't be a one trick pony and an energy oriented economy.

He does, but it seems simplistic for him to say "we'll need to address this problem somehow," when the preponderance of the evidence indicates that a new energy boom would not fuel (sorry) diversification, but in fact work against it. It certainly wouldn't lead to diversification without a degree of state intervention that is far beyond what today's business community (the petroleum industry more than most) is willing to tolerate.

[raider.adam]

He does, but it seems simplistic for him to say "we'll need to address this problem somehow," when the preponderance of the evidence indicates that a new energy boom would not fuel (sorry) diversification, but in fact work against it. It certainly wouldn't lead to diversification without a degree of state intervention that is far beyond what today's business community (the petroleum industry more than most) is willing to tolerate.

I don't know. Take PA for example. Corbett is throwing every tax break he can to get an ethane cracker and the variety of other spinoff industries to locate into PA. Also, if you divert tax revenues from the energy industry into commercial and/or startup tax breaks to help other businesses to step up, it can be done.

I think the most important point to which he brought up is to make sure the energy boom wealth doesn't consolidate into a small handful of people. Sure the innovators that found ways to access the resources should get their rewards, but keep in mind it is also due to resource extraction.

So I think the optimism is good as well as the heading of warning (as you mention too).