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Continues next page >> By Peter Gardett
AOL Energy
Working in the energy sector is an inherently political activity. I once sat opposite a friend of a friend at lunch, and when she found out that I covered the energy business
A heavily contested presidential election against the background of sweeping changes in the energy sector itself proved a perfect time to reexamine long-held theories about the politics of energy. While the traditional cultural understanding of resource-access-obsessed oil and gas executives locked in battle with environmental activists constantly advocating for more stringent regulations remains an easy and valid way of portraying energy politics in the U.S. as we leave 2012 for the uncertain future of 2013, we also discovered some surprising new industry trends and political developments that may undermine the ferocity of old disputes while giving rise to new standoffs. 1. The energy sector is now a technology sector as much as it is an industrial sector. Disruptive technology is usually held to be the province of laptop-fueled startups in trendy warehouse spaces, but the same questioning of long-held assumptions and reliance on innovation to drive change has emerged as a specialty at large, traditional oil and gas companies too. Hydraulic fracturing - fracking - is the obvious technology change that has reawakened the U.S. domestic energy sector, but other changes have also swept across the industry. In situ development of oil sands, use of solar in extraction techniques and use of biomaterial in fracking fluids are signs of an industry alive with change and responsive to disruptive technology. With new small-scale nuclear technology, rapidly climbing capacity factor for renewable energy and auto innovations driving long-overdue changes in the transportation sector, energy giants now have common cause with innovative firms across other sectors, including IT. That makes them part of the new economy, committed to innovation and policies that support it, no matter how stodgy they may at first appear. 2. Energy policy needs to change to accommodate an era of fossil fuel abundance. After an early head start, the U.S. responded to energy shortages in the Second World War by kicking off an energy policy designed to support production at all costs, and set up management and regulatory structures based on the belief that there will be less energy tomorrow than there was today. Despite a series of production booms and resulting price crashes, the perception that the world is "running out" of energy sooner rather than later continues to define political understanding of North American energy. No longer. The same technology advances discussed above now mean that regulatory approaches to the sector will have to focus on how and why demand growth occurs; increasingly credible forecasts show that availability of oil and natural gas may be the least of the U.S. political problems around energy. Spending the resource wisely will be the focus of next-generation energy policy, and it doesn't take much to imagine that (to simplify matters) the difference between becoming a Norway and becoming a Venezuela lies in policy, regulation and national politics as much as it does in access to resources. Page 2: Traditional methods of distribution not equipped to handle changes in use >>
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