Opinion | Michigan, US need a robust energy policy

With the advent of a new administration in Washington, the US is undergoing a significant shift  in energy policy. Currently, more than 80% of US energy is derived from fossil fuels. During the Biden administration, the US oil industry began producing more oil than any time in its history. The new administration wants to further streamline the permitting process and open up more federal land for drilling. But do oil companies even want to drill more oil?  

A quick analysis of the market and the forces that govern it suggests that the answer is an emphatic “no.” Oil companies are sitting on thousands of permitted wells without drilling them right now. To start drilling on newly permitted sites requires significant capital investment, which oil companies, focused on providing significant and stable shareholder return, have been loath to commence. During the pandemic, when demand went through the floor and the price of gas dropped precipitously, oil companies were caught with a significant overcapacity, leading to well closings, layoffs, and lower profits. They have no desire to return to a situation which will result in lower gas prices. Rather, it is in their interest to keep production at moderate levels to maintain a higher price of gasoline. This was made explicitly clear by Liam Mallon, head of Exxon's upstream division, at the Energy Intelligence Forum conference in London, where he stated, "A radical change (in production) is unlikely because the vast majority, if not everybody, is focused on the economics of what they're doing." 

Further, it is disheartening that the new administration is curtailing use of wind and solar. The global renewable energy market today is over $1 trillion annually and is projected to exceed $2 trillion in the next six to eight years. Regardless of one’s viewpoint on the fossil fuels-vs-renewables debate, it is simply not in the economic interests of our nation to cede a $2 trillion-plus market to China and other nations. The US, with states like Michigan leading the way, has the capacity and capability to compete in the gigantic renewable-energy market, and an increased share of it will provide thousands of skilled, high-paying jobs. There is no reason that US companies cannot be major players in both oil and gas and renewables — this is not an either/or choice, we CAN do these two things at the same time. 

It has been said that “The Stone Age didn’t end because we ran out of stones.” The Stone Age ended when humankind developed better technologies — copper, and then bronze, and then iron and steel. This saying was purportedly first uttered by a Saudi oil minister — and he wasn’t talking about stones! He was saying that the Age of Oil will not end when we run out of oil — it  will end when we come up with better energy technologies. 

Are we there yet? It depends on one’s definition of “better.” From a purely consumer point of view, a new technology becomes “better” when it can perform at the same or higher level at  the same or lower price. Solar, wind, electric vehicles, batteries — in some ways they perform as well or better than existing technologies but in other ways they do not. In some scenarios they may be cost-competitive and in others they are not. So we are challenged with continuing to improve these technologies before they can become the “steel” to the “stone” of oil.  

But as usual, challenges become opportunities for those who want to work toward a better future. And the opportunity lying within this challenge is that it points the way to an energy policy that is prepared to press forward across a broad front of technologies in order to provide a sustainable energy future. This would include continuing to use fossil fuels as responsibly as we can; supporting carbon capture and storage R&D and new technologies that will allow us to extend the time over which we can use fossil fuels while minimizing further damage to the environment; investing strategically in renewables — more efficient solar cells, new lightweight, high-strength materials for wind turbines, and new battery chemistries and architectures that allow for increased range and performance of electric vehicles; and pursuing other approaches, including nuclear and geothermal, that will allow us to develop a portfolio of energy  technologies that is sustainable for many decades to come. 

Fortunately, with a STEM workforce of 36 million strong, the US has the expertise and  experience to meet this challenge. The scientists and engineers of our country are not members of the “Washington elite.” They are not peddlers in the “deep state.” They are non-partisan truth-seekers who go to work every day with the goal of making people’s lives better. The pursuit of knowledge and its application to the benefit of society has defined American  excellence in the 20^th and 21^st centuries. Let us rely on our scientists and engineers to lead the way and empower them with the resources and support they need to make a secure and  sustainable energy future for all of us a reality.