Boundless natural gas, boundless opportunities

We're already a net exporter of coal. In terms of electricity, most of our trade is with Canada, and that never really seems to have been much of an issue. The US is also a net exporter of petroleum products, so we now export more gasoline and diesel fuel than we import. We import a lot of oil products, particularly into the East and West Coasts. But we are a big exporter, mostly from the Gulf Coast, with the increase in refinery utilization down there. The overall picture now is one in which the US trade deficit is being reduced by growing oil and petroleum product exports.

The only big outstanding question is: could the US potentially be a net exporter of crude oil? In the EIA's Reference case forecast, that doesn't seem likely. Despite the fact that our production is rising while demand is falling, we're still importing about five million barrels a day net of of crude oil and products. It doesn't seem likely that net importsd are going to go to zero--at least not given the facts as we currently see them. It's possible, in a high petroleum resources case combined with a technology and policy-driven low demand case, but not probable.

One thing you want to keep in mind is what it would mean, exactly, if the US were completely self-sufficient in energy. Some people like to use the phrase, "energy independence." We would still be part of a global trading system in energy, and particularly petroleum products and crude oil. And if oil prices go up globally, they're going to go up in the United States. If there's a geopolitical problem somewhere or a weather problem somewhere-anything-the US would be impacted just as it has always been. The US has a lot of interest in what's going on around the world, in the Middle East and elsewhere, regardless of whether it is independent or self-sufficient in fuels. Those political and economic interests will remain whether we become an exporter or not.

JS: What role will the expansion of the Panama Canal play in this?

AS: What they're doing is widening the Panama Canal. They'll make the Canal itself wider and the locks longer, and the net result will be the potential to save in transportation costs through the use of larger oil tankers and LNG tankers. This offers an opportunity to reduce the costs associated with global trade. It is something that I know Panama and all of the customers who use the Panama Canal are very interested in seeing happen. There have been some cost and labor issues, but I'm sure those will be resolved and this expansion will eventually be completed. When that happens, it's going to reduce the cost of moving goods back and forth between the Atlantic and the Pacific, and that's going to apply particularly to things like liquefied natural gas and oil.