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Oil pumpjacks are seen along a section of Highway 33 known as the Petroleum Highway north of McKittrick in Kern County, Calif. The U.S. is expected to top its previous production record this year, Carolyn Kissane writes.
Frederic J. Brown/AFP via Getty Images
About the author: Carolyn Kissane is the academic director of the graduate programs in global affairs and global security, conflict and cybercrime at the Center for Global Affairs and a clinical professor at New York University. She is also director of the SPS Energy, Climate Justice and Sustainability Lab at NYU.
President Biden in Tuesday’s State of the Union address clarified what is an inconvenient truth: “We’re still going to need oil and gas for a while, at least another decade. And beyond that,” he said. This is a surprise reversal from where his presidency started, when he pledged to take the U.S. off oil and gas. Now he wants investment in new output.
Biden’s pivot on hydrocarbons is important because U.S. energy is a source of unique strength, both domestically and internationally. The U.S. is well-positioned on all energy fronts, to lead the world and to leverage its home advantages. As Biden said oil and gas will continue to play a role in the U.S. and the world’s energy mix while the U.S. moves to take the lead with an industrial policy that puts decarbonized energy support front and center. Biden illustrated less confusion and wobbling than we’ve seen from this administration: The world needs U.S. oil and gas and a clean-technology push. The U.S. is exceptionally endowed to do both.
Even under the most optimistic net-zero scenarios, oil and gas will remain a part of the energy system beyond 2040 and even 2050. Fossil energies today comprise over 80% of global energy. The next decades will see declines in the portion made up of hydrocarbons, but they are not going away. Their obituaries won’t be written for decades; terminal decline lies beyond 2030. For this reason, the U.S. remains a critical energy power. If it matters where the barrels come from, then the administration is correct in ending the narrative that the world won’t need oil and gas from the U.S. in the years ahead.
The U.S. is better positioned to be a player rather than a receiver. The U.S. is the world’s largest oil and gas producer, and is now a net exporter of oil and gas, a dramatic turnaround from recent decades. According to the Energy Information Administration, the U.S. is expected to increase oil production to 12.4 million barrels a day in 2023, above the high set in 2019.
The U.S. has the resource endowments to lessen geopolitical risks associated with energy security while also being a major power player in deploying lower-carbon energy technologies.
Capitalism and entrepreneurial ingenuity are significant advantages in energy. In 2022, the U.S. exported a record amount of petroleum and gas, offsetting some of the geopolitical energy risks from Russia’s reinvasion of Ukraine while also advancing clean energy technologies.
U.S. natural gas has helped keep the lights on and people’s homes warm in Europe and added protection against the weaponization of Russia’s gas. U.S. liquefied natural gas came to the rescue and will continue to in the years, especially in the winters, to come. U.S. natural gas output is up 10% in the last two years. That boost helped prices remain more stable on the domestic front, and the extra output supported LNG exports to Europe. There should be no going back to Russian gas, and the U.S. can contribute to that decoupling.
A half-century has passed since the Arab oil embargo of 1973 disrupted the oil order, catapulting the West and the rest of the world into a period of skyrocketing oil prices. Today’s energy security is different. Energy security is no longer just about oil or gas but about the energy that serves as the backbone of economies and the energy transition. Russia’s reinvasion of Ukraine is a stark reminder that countries must be steadfast in ensuring energy security. At the same time, climate change requires that the world manage the difficult feat of decarbonizing while maintaining accessibility and affordability.
China’s ascent in producing renewable-energy technologies—wind turbines, solar panels, batteries, and the necessary mineral and metals input—puts the country in a definitive lead on the “green race.” Recognizing this dangerous leverage, the U.S. has put skin in the game with the passage last year of the Inflation Reduction Act and a more concerted industrial policy designed to advance energy-transition technologies.
Private enterprise and government support foster vital energy and climate entrepreneurship through clean energy. The U.S. is one of the few countries that can do it all. The IRA is a catalytic force, moving investment forward—sending the signals America is committed to clean energy industrialization. The law’s $370 billion in new spending is unleashing international green-investment upmanship. Europe followed with its own green tech industrial policy, and Japan did too. China began its green energy journey much earlier after recognizing it could find a strategic advantage in becoming an exporter of decarbonization technologies. But China remains a massive consumer of coal, and, unlike the U.S., doesn’t have vast natural gas and oil resources.
The investment landscape is shifting. The world spent over $1.1 trillion transitioning to clean power in 2022, the first time clean energy matched hydrocarbon investment. China accounted for $546 billion of that amount of energy transition spending; the U.S. was second. The IRA will help it catch up. Wall Street is already in on clean energy investments, and the amount will only grow exponentially in the years ahead. The U.S. economy benefits on both sides of energy investments with the rapid scaling up of multiple decarbonization technologies, while also benefiting from the established oil and gas sectors.
New energy security is both a threat and an opportunity for the U.S. In the 1970s, the cardholders were the OPEC countries that used the oil weapon against Western countries. Today’s threats are around renewable energy supply chains, access to critical minerals, and evolving the energy system with limited disruption and chaos. The U.S. is entwined in a challenging trade relationship with China, and the country’s dominance in the clean energy space wind, solar, electrolyzers, batteries, heat pumps, and more is a source of vulnerability.
China can’t compete with the U.S. on the production and export of hydrocarbons, but China has subnational dominance in critical renewable energy inputs. The U.S. needs aggressive deployment. The government must reduce red-tape bureaucracy to simplify and accelerate the build-out of the required energy infrastructure while ensuring resilience to supply chain disruptions. The supply chain won’t begin and end in the U.S., even if that’s a great sound bite for a State of the Union. It will require nearshoring and friend-shoring, which will also contribute to stronger energy alliances through trade and investments. This decade is decisive. The age of decarbonization can’t be in China’s hands. The U.S. is on its way to becoming a clean energy manufacturing and industrial hub.
Decarbonizing the energy system is not a threat to energy security but rather a part of a larger paradigm shift. Energy security is expensive, and the transition comes with a hefty price tag. But the alternative is more costly—climate change and its impacts. The U.S., more than any other country, can support and achieve security, affordability, and sustainability through its domestic endowments of oil and gas and a bolder and more expanded deployment of renewable energy.
Responsible climate stewardship for the U.S. will require acknowledging that oil and gas will continue to play a critical role in global energy security while advancing the deployment of advanced energy innovation. The ongoing energy transition is a long-term process. We can only remove energy sources by ensuring our system is resilient.
The U.S. can out-compete China on energy and responsible climate stewardship. 2023 will go down as the year the U.S. showed all-of-the-above energy muscle in forwarding an ambitious clean energy industrial policy and using its rich hydrocarbon advantage to improve global energy security.
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