US Energy Situation
Problems of targeted development of the fuel and energy complex (FEC) become more and more important in the economic policies of most states.
One may write about the fact that society is leaning towards renewable energy sources, encouraging scientists to invent new technologies, economic leverage remains the most important. Alternative Energy today is dependent on the cost-effectiveness and benefits of development.
The United States example of a conflict can be considered between the need and the possibilities of building a new energy infrastructure. The consumption of electricity in the country increases every year, but nowadays the ball is ruled by natural gas prices on that are so low, so that they can stop the development of any competitive industry. Renewable energy initially loses because of the high costs of production, installation and operation of equipment.
A few years ago, everyone in the U.S. was very enthusiastic, and believed that in just a decade, renewable energy will press on the market gas and coal. Oil prices continue to rise, so consumers of fuel also looked at what is happening with hope. The government promised benefits, provided exempt from taxation, introduced stimulus packages for those who took on new projects. The latest technologies were launched. Today, the enthusiasm died down considerably, Chinese industrialists withdrew from the market several major U.S. companies producing solar panels. In particular, the company Solyndra, which was granted from the state loan of more than $ 500 million did not cope with the competition and declared bankruptcy.
Analysis of U.S. energy strategy shows that, after a series of sharp crisis periods of 70s and 80s, the U.S. economy again continued internal restructuring aimed at reducing fuel and energy consumption per unit of GDP, further increase of energy efficiency and the reduction of strategic country’s vulnerability in the event of any power outage. Although, the measures partly removed critical urgency of energy problems, a qualitative change in the situation of the country in the field of energy still has not happened. As a result, since the second half of the 90’s, the U.S. once again felt the full impact of their increasing vulnerability to actions of leading exporters of the fuel and energy products in a volatile and difficult to predict price trends.
According to the U.S. forecasts until 2020, increase of the total energy consumption will boost the consumption of primary energy resources in the whole country, and per capita. The increasing energy saving costs in the economy, based on each dollar of GDP, declined continuously since 1970, and are likely to continue to decline (Energy in Charts, 2012).
According to Justin Ewers, the declared prospect of U.S. energy independence is a myth. The head of Exxon Mobil Corp. Lee Raymond supports the opinion. According to authoritative American edition of Wall Street Journal, referring to the opinion of Raymond Lee, Washington should immediately build a pragmatic relationship with the leading oil countries. The head of Exxon Mobil Corp. believes that the U.S. does not have any reserve of energy independence (Ewers, 2008). The head of Exxon Mobil Corp. said that coal, gas and oil for more decades will be the main source of energy on Earth. In this regard, Lee Raymond considers the unviable development of environmental regulaions, preventing the use of hydrocarbons as a source of energy.
It should be noted that the basic principles of the energy strategy of Barack Obama were formed in the course of the race. It was then that the next U.S. president announced that the difficulties experienced by America, were rooted in excessive dependence of country’s fuel balance on fossil fuels.
The principal difference between the energy doctrine of Obama and other strategic initiatives in this area, offered by his predecessors is that the direction of energy development, based on renewable and alternative resources, which in most countries are of the far future, declared as a real alternative to traditional energy, based on the priority use of fossil energy resources. Declaring that the U.S. goal is to achieve global guaranteed leadership in the world clean energy, Obama administration has thus confirmed that it is not just for a declaration of intent, but the most important priority for development.
Reforming American Energy, according to a plan of Obama, should be done with the active financial support from all levels of government. The restructuring of the country’s fuel balance in favor of clean energy may require attraction even in the next 10 years, at least 150-180 billion dollars of direct investment on the principles of public-private partnership, which should help to create 5 million new jobs (Vitter, 2012).
In “U.S. National Security Strategy 2010”, U.S. energy security issues are directly linked to national security issues. In particular, it is argued that the nation which has a leading position in the world in clean energy, “will have significant economic benefits and advantages in security” and, on the contrary, as the U.S. is dependent on fossil fuels, their safety and well-being are at stake. For this reason, Americans “must guarantee the security of the free movement of global energy resources” in the world (National Security Strategy, 2010).
Despite repeated claims to the contrary, Obama’s energy strategy is not absolutely independent. Its amorphous nature and inconsistency is largely due to the fact that the White House has constantly dominated by supporters of the traditional energy and very strong positions are owned by oil lobby. Starting with a complete denial of the need to pay attention to fossil energy sources, Obama later took a more flexible position (Vitter, 2012).
Many areas of budget spending on energy were formed long before the arrival to power of the Democratic Party and joined the tools of the Obama administration’s energy strategy, as practically unchanged.
Based on a number of legislative acts and recommendations of industry lobbyists were formed ideas of the energy reform, which in concentrated form were developed in the Law about economy recovery and reinvestment of America (American Recovery and Reinvestment Act of 2009, n.d.).
Adopted in the development of the law, the U.S. budget for 2012 financial year provides, in particular, a doubling compared to the budget for 2010 financial year, allocations for energy efficiency and a 70% increase in allocation for renewable energy. Budget provides $ 36 billion for lending to the nuclear facilities, and $ 2 billion – in the form of loan guarantees for projects in the renewable energy sector.
These laws and other applicable legislation provide significant benefits and subsidies for energy, which are actively used by the Obama administration, as evidenced by a more than twofold increase in state support for energy.
To justify a substantial increase in public spending in an era of budget deficits, there are, in particular, such arguments as a positive effect of subsidies on employment and income levels, including disadvantaged areas, the establishment of new enterprises and the emergence of new jobs in clean energy. Thus, during the debate in the U.S. Congress on the draft Law on the economic recovery, the main argument in favor of its adoption was the promise by Democrats that the implementation of this law will establish 224.5 thousand new jobs in clean energy and related industries.
Energy reform undertaken by Obama administration is seen as controversial in the U.S., and outside of this country. Many Americans are frankly disappointed by the lack of visible impact of the new energy policy for the state of the fuel market. Conducted by Reuters and Ipsos poll showed that 64% of the total number of respondents believes that the U.S. is on the wrong track of development (Reuters Polls, 2012).
The U.S. Department of Energy is rather pessimistic about the possibility of making major changes in the fuel mix, which base on the period up to 2035 will be formed by the traditional exhaustible energy resources. According to these estimates, the consumption of liquid fuels in the current period, will not decrease, but increase. The transport sector in 2035 will continue to consume mainly gasoline, diesel and jet fuel. Achieving peak of oil production in the U.S., which was previously predicted for the next few years, it seems, has been postponed until at least 2020. Oil imports in 2035 will be reduced by only 8% compared to 2009, while the share of imports in the U.S. liquid fuel in its fuel consumption will reduce by 10% – to 38%. By 2035, the share of renewable energy in the U.S. will increase – to 15.8%, but these are not enough to significantly weaken the economy’s dependence on traditional energy sources (Rebello, 2012).
However, there definitely are positive changes that the American nation has with an energy program of Mr. Obama. Thanks to federal support in the country, such progressive directions of modern energy are developed, as the production of shale gas, biofuels, fuel-efficient car engines, energy-storage batteries, energy efficient appliances, equipment for wind turbines, semiconductor photovoltaic panels. Transformations carried out in the U.S. Energy, have a favorable impact on related industries, including general, electrical and transportation equipment, construction and agriculture. To the merits of the Obama administration also can be included the development of a number of effective programs and tools for energy saving. Thus, support for clean technologies is not just the embodiment of the “American Dream” of green, pollution-free environment of energy, but also a tool for promoting economic growth.
The most important advantage of alternative energy is free use of renewable resources, which will never be with those who produce and supplies electricity in conventional power plants, so that the prospects for renewable energy are rather curious. Industry must survive several stages of transformation before taking a high position in the country’s economy.