This essay is about the continued reliance on Petroleum by the United States and its effects on the US economy between now and 2025. The geo-politics of oil as well as the options before the US in terms of energy transition are discussed here. The base report for this paper is the “Global Trends 2025” report published by the National Intelligence Council.
At the outset, I would like to state a Safe Harbor statement. Predicting the future is a hazardous venture and one can be certain of it only on the basis of extrapolation of current trends into the future. However, I wish to point out that we can make safe bets about the future with the data that is available with us.
The first point to be noted is that the world would be fundamentally different in 2025. The necessity of energy transition would dawn on all the major countries of the world and it is high time that the United States government take steps to ensure that this happens. We would be witnessing the transition from a “Hydrocarbon Economy” to that of say, a “Hydrogen Economy”. For this to happen, there are several steps that the policy makers have to undertake.
These include support for alternative technologies in the form of increased federal budgetary allocation for research and development of these technologies. However, the report is not too optimistic on this as it states, “Long-lasting hydrogen fuel cells have potential, but they remain in their infancy and are at least a decade away from commercial production. Enormous infrastructure investment might be required to support a “hydrogen economy.” An Argonne National Laboratory study found that hydrogen, from well to tank, is likely to be at least twice as costly as gasoline”.
This leaves us with a scenario where the United States has to continue to rely on the traditional energy source i.e., Oil. This would be accompanied by the geo-politics of Oil that includes having uninterrupted access to a steady reserve of oil and control over the major sources of production, at the extreme. Both these would involve the US military’s presence in safeguarding the interests of the American Economy. As such, we have seen instability in the Middle East threatening the world price of Crude Oil every now and then. Such disruptions to the supply of crude must be kept at a minimum and this would involve diplomatic and political maneuvering by the US.
The world may have to live with higher petrol prices and the American consumer may well be advised not to panic when he or she sees the “pump price” of Gasoline rise beyond a certain level. Some amount of austerity and frugal living are called for on the part of the average American. Gas guzzling SUV’s and similar types of vehicles must be phased out and energy efficiency should be the norm.
With the rise in Oil prices and reduced production, players like Russia and Iran, countries that are ambivalent in their stance towards the US, would gain prominence. The US would have to countenance the presence of these and other countries like Venezuela having disproportionate power on the world stage.
In conclusion, it is apparent that we prepare for a world where the phenomenon of “Peak Oil” cannot be ignored and we have to come to terms with it. The measures outlined above and the steps that we discussed about alternatives are some projections we can make based on the data that is available with us. It is the hope of this author that the world in 2025 is more stable and peaceful than it is now.