Just one quick comment on "making it cheaper to heat homes in places like New England".
The Northeastern states have been very resistant to building out their pipeline infrastructure to take natural gas from Pennsylvania into their markets. So even though places like NY & Boston are very close to the gas fields, they pay a much much higher price for gas. Most of New England gets their gas shipped in LNG from from Trinidad.
It's an obvious example of the issues with permitting, unintended consequences, and how patchwork things can be on the local level. In most of the rest of the US, including here in Texas, we have seen greatly reduced natural gas prices.
My dad, who knew his geology, would always tell me as a teenager that once someone found a cost effective way to harvest shale oil, it would be a game changer. Unfortunately he didn't live long enough to see it through, but he'd be very proud that he called that.
“Environmental organizations like to argue that fracking still poses risks to water supplies, but trade groups say that the process is safe and there doesn’t seem to be a clear scientific consensus on this.”
Most of the “evidence” used by the former is drawn from areas where well water has been laced with gas since before most of my ancestors had migrated to this country.
Lighting a glass of tap water ablaze was a party trick in places of Northern PA where my family has ties when I was a small child.
Most of the exceptions are not due to a flaw in the technology or technique but subpar materials for well linings as they pass the shaft through the aquifer layer, which are quite well-regulated and this rare.
Mutatis mutandis, this whole piece applies in reverse to the crass error of opposing fossil fuel production and transmission projects in the US. Joe Manchin was right about permitting reform.
This was a really good piece, lines up with the data and trends I see too (I'm a cleantech consultant). I'd just add a few points to push it further.
1) Energy storage prices are falling quickly too. We're getting close to the point where 1-4hr grid-scale Li-ion batteries are cost-competitive with having natural gas peaking plants, which will make the whole grid more efficient regardless of the mix of sources, but especially for increasing wind and solar penetration. The rise in EVs will ultimately represent us building out the equivalent of 1-2 days of storage relative to total current electricity use, and with California mandating V2G tech, and most people using only a fraction of their range, this will be very valuable for increasing renewables penetration to (but only if we build out enough charging stations to have people plugged in wherever they're parked during the day). (All of this also reduces the need for long-distance electricity transmission, which is expensive and just hard/slow to build and coordinate politically).
2) If wind and solar prices keep falling on-trend, then making green hydrogen, or synthetic methane/methanol/ammonia/fuels, becomes dramatically cheaper, and switches from energy-cost-dominant to capex-dominant, and the latter is the kind of thing we can improve with scale and iteration. Synthetic hydrocarbons are also easier to ship long distances than electricity, and can replace petrochemical feedstocks as well. Plus we're already seeing e.g. Australia working hard to become a clean fuels exporting hub over the next decade, and Korea working to convert coal plants to gas, and upgrading gas plants to be able to also use (some) hydrogen. Right now this is a deeply weird market, heavily distorted by subsidies and mandates such that everyone tries to ship green fuels to California and Europe no matter where they're made, but that will pass as supply increases.
3) Weather-wise, the Middle East is also well positioned to remain an energy exporter in a renewables-dominant world, with high solar potential and fairly low population density. So far the Saudi projects I've seen focus on blue hydrogen and CCS, which makes sense for them for now. This will be interesting to see how it all plays out.
4) A decent amount of natural gas infrastructure stays relevant in a renewables-dominant world in a way that coal infrastructure doesn't, because we're going to need CO2 utilization to make a lot of chemicals and materials, and converting it to gas is likely to be a big part of the set of pathways we'll use for that.
As has been discussed here at SB and elsewhere, the simplest, most efficient way to address the externality of carbon emissions would be a carbon tax.
Our current approach, an array of regulations and subsidies attempting to micromanage the way we produce and consume energy, puts politicians (and ultimately taxpayers) in the position of venture capitalists. There will be hits but also some expensive misses.
I predict one very expensive miss will be the mad rush to replace gasoline vehicles with EVs. A faster, more cost effective reduction in vehicle emissions would be achieved by a carbon or gasoline tax or at least a flexible set of incentives that encouraged the purchase of any high MPG vehicle regardless of technology (in other words, show me some love if I trade in my Suburban for a Prius).
Natural gas is indeed a convenient hedge against the non-dispatchable nature of wind and solar (i.e., those renewables cannot simply be turned on and off according to demand). It is nevertheless worthy of note that over the longer term continued reliance on natural gas for electricity generation may not be compatible with emissions-reduction goals. The NREL “Earthshot” target for 2050, for instance, allows for substantial replacement of natural gas not only through increased wind and solar, but also through progressive implementation of geothermal. (That same projection does not see much of a future for nuclear, but if the nuclear cost dilemma could be resolved that might change.)
Augustine, Chad, Sarah Fisher, Jonathan Ho, Ian Warren, and Erik Witter. 2023. Enhanced Geothermal Shot Analysis for the Geothermal Technologies Office. Golden, CO: National Renewable Energy Laboratory. NREL/TP-5700-84822.
Due to the shale boom and Saudi raising production, the oil price crashed between 2014-2016 which hurt the economic growth of many complacent petro states. You can tell who the winners and losers of economic growth from 2012-2022 based on which petrostates were damaged by the 2014-2016 commodity slump:
I agree that fracking has been a game changer for oil and natural gas production. However, I have to take issue with Matt's statement that "fracking made America a net oil exporter." This is only true if you define "oil" as all petroleum products, which includes many products other than crude oil. In fact, according to the USEIA, the US remains a net importer of crude oil. In 2022, the US imported 6.28 million barrels per day of crude oil and exported 3.6 million barrels per day of crude. It is a crucial distinction that shows that the US is not yet energy independent when it comes to crude oil.
The media narrative on fracking hasn’t changed much since. It’s unlocking a lot of economic and energy potential but it’s also got some unsavory risks that (even if low probability) would be catastrophic for the rural communities where a lot of this work happens. That seems mostly true? A big potential upside with a lower risk but big potential downside. Seems this is a relative no brainer in the trade off wars though.
'These days, renewables like wind and solar are cost-competitive with fossil fuels in many places.'
Does this take into account the fact that fossil fuels can be stored and consumed when needed, whereas renewables have to be consumed when the energy is obtained (barring very limited battery storage)? Also, how efficient is wind power in Wyoming given hardly anybody lives there?
How fracking reshaped the world
I could not be better targeted than I am by Slow Boring’s combination of obsessively pro growth politics and open Democratic partisanship
"This piece is written by Milan the Researcher, not the usual Matt-post."
CPI needs to track title inflation, how did intern become Researcher.
Just one quick comment on "making it cheaper to heat homes in places like New England".
The Northeastern states have been very resistant to building out their pipeline infrastructure to take natural gas from Pennsylvania into their markets. So even though places like NY & Boston are very close to the gas fields, they pay a much much higher price for gas. Most of New England gets their gas shipped in LNG from from Trinidad.
It's an obvious example of the issues with permitting, unintended consequences, and how patchwork things can be on the local level. In most of the rest of the US, including here in Texas, we have seen greatly reduced natural gas prices.
My dad, who knew his geology, would always tell me as a teenager that once someone found a cost effective way to harvest shale oil, it would be a game changer. Unfortunately he didn't live long enough to see it through, but he'd be very proud that he called that.
A great SlowBoring summary of fracking's significance. But it really should have gone back to the Bush/Cheney administration to fully capture why the fracking boom happened. Cheney's energy task force, convened in 2001, recommended a host of regulatory changes that greatly abetted expansion of this method for extracting hydrocarbons . https://insideclimatenews.org/documents/epa-administrator-christine-todd-whitman-fracking-memo-vice-president-dick-cheney-2001/ I was reporting on the climate moves of the administration at the time: https://www.nytimes.com/2001/04/28/us/after-rejecting-climate-treaty-bush-calls-tutors-give-courses-help-set-one.html
“Environmental organizations like to argue that fracking still poses risks to water supplies, but trade groups say that the process is safe and there doesn’t seem to be a clear scientific consensus on this.”
Most of the “evidence” used by the former is drawn from areas where well water has been laced with gas since before most of my ancestors had migrated to this country.
Lighting a glass of tap water ablaze was a party trick in places of Northern PA where my family has ties when I was a small child.
Most of the exceptions are not due to a flaw in the technology or technique but subpar materials for well linings as they pass the shaft through the aquifer layer, which are quite well-regulated and this rare.
Mutatis mutandis, this whole piece applies in reverse to the crass error of opposing fossil fuel production and transmission projects in the US. Joe Manchin was right about permitting reform.
This was a really good piece, lines up with the data and trends I see too (I'm a cleantech consultant). I'd just add a few points to push it further.
1) Energy storage prices are falling quickly too. We're getting close to the point where 1-4hr grid-scale Li-ion batteries are cost-competitive with having natural gas peaking plants, which will make the whole grid more efficient regardless of the mix of sources, but especially for increasing wind and solar penetration. The rise in EVs will ultimately represent us building out the equivalent of 1-2 days of storage relative to total current electricity use, and with California mandating V2G tech, and most people using only a fraction of their range, this will be very valuable for increasing renewables penetration to (but only if we build out enough charging stations to have people plugged in wherever they're parked during the day). (All of this also reduces the need for long-distance electricity transmission, which is expensive and just hard/slow to build and coordinate politically).
2) If wind and solar prices keep falling on-trend, then making green hydrogen, or synthetic methane/methanol/ammonia/fuels, becomes dramatically cheaper, and switches from energy-cost-dominant to capex-dominant, and the latter is the kind of thing we can improve with scale and iteration. Synthetic hydrocarbons are also easier to ship long distances than electricity, and can replace petrochemical feedstocks as well. Plus we're already seeing e.g. Australia working hard to become a clean fuels exporting hub over the next decade, and Korea working to convert coal plants to gas, and upgrading gas plants to be able to also use (some) hydrogen. Right now this is a deeply weird market, heavily distorted by subsidies and mandates such that everyone tries to ship green fuels to California and Europe no matter where they're made, but that will pass as supply increases.
3) Weather-wise, the Middle East is also well positioned to remain an energy exporter in a renewables-dominant world, with high solar potential and fairly low population density. So far the Saudi projects I've seen focus on blue hydrogen and CCS, which makes sense for them for now. This will be interesting to see how it all plays out.
4) A decent amount of natural gas infrastructure stays relevant in a renewables-dominant world in a way that coal infrastructure doesn't, because we're going to need CO2 utilization to make a lot of chemicals and materials, and converting it to gas is likely to be a big part of the set of pathways we'll use for that.
As has been discussed here at SB and elsewhere, the simplest, most efficient way to address the externality of carbon emissions would be a carbon tax.
Our current approach, an array of regulations and subsidies attempting to micromanage the way we produce and consume energy, puts politicians (and ultimately taxpayers) in the position of venture capitalists. There will be hits but also some expensive misses.
I predict one very expensive miss will be the mad rush to replace gasoline vehicles with EVs. A faster, more cost effective reduction in vehicle emissions would be achieved by a carbon or gasoline tax or at least a flexible set of incentives that encouraged the purchase of any high MPG vehicle regardless of technology (in other words, show me some love if I trade in my Suburban for a Prius).
Excellent post! But admit it, Milan, you wrote this -- "[w]ay back in my first-grade days in 2009" -- with a smirk. Or maybe a rueful smile.
Natural gas is indeed a convenient hedge against the non-dispatchable nature of wind and solar (i.e., those renewables cannot simply be turned on and off according to demand). It is nevertheless worthy of note that over the longer term continued reliance on natural gas for electricity generation may not be compatible with emissions-reduction goals. The NREL “Earthshot” target for 2050, for instance, allows for substantial replacement of natural gas not only through increased wind and solar, but also through progressive implementation of geothermal. (That same projection does not see much of a future for nuclear, but if the nuclear cost dilemma could be resolved that might change.)
Augustine, Chad, Sarah Fisher, Jonathan Ho, Ian Warren, and Erik Witter. 2023. Enhanced Geothermal Shot Analysis for the Geothermal Technologies Office. Golden, CO: National Renewable Energy Laboratory. NREL/TP-5700-84822.
Due to the shale boom and Saudi raising production, the oil price crashed between 2014-2016 which hurt the economic growth of many complacent petro states. You can tell who the winners and losers of economic growth from 2012-2022 based on which petrostates were damaged by the 2014-2016 commodity slump:
https://open.substack.com/pub/yawboadu/p/world-bank-data-2022-update?r=garki&utm_campaign=post&utm_medium=web
I agree that fracking has been a game changer for oil and natural gas production. However, I have to take issue with Matt's statement that "fracking made America a net oil exporter." This is only true if you define "oil" as all petroleum products, which includes many products other than crude oil. In fact, according to the USEIA, the US remains a net importer of crude oil. In 2022, the US imported 6.28 million barrels per day of crude oil and exported 3.6 million barrels per day of crude. It is a crucial distinction that shows that the US is not yet energy independent when it comes to crude oil.
Y’all remember the movie “Promised Land”? That was at the peak of the anti fracking panic.
https://www.rottentomatoes.com/m/1016837-promised_land
The media narrative on fracking hasn’t changed much since. It’s unlocking a lot of economic and energy potential but it’s also got some unsavory risks that (even if low probability) would be catastrophic for the rural communities where a lot of this work happens. That seems mostly true? A big potential upside with a lower risk but big potential downside. Seems this is a relative no brainer in the trade off wars though.
The oil price crash from 2014 to 2016 also damaged growth in petrostates like Nigeria and Venezuela. You missed a great chance to talk about that!
'These days, renewables like wind and solar are cost-competitive with fossil fuels in many places.'
Does this take into account the fact that fossil fuels can be stored and consumed when needed, whereas renewables have to be consumed when the energy is obtained (barring very limited battery storage)? Also, how efficient is wind power in Wyoming given hardly anybody lives there?