https://sipa.columbia.edu/faculty/jason-bordoff
Center on Global Energy Policy, Columbia University http://energypolicy.columbia.edu/
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School of International and Public Affairs, Columbia University https://sipa.columbia.edu/
hydrocarbons from shale formations in an economical way. This happened in the U.S., in part, because we have a very entrepreneurial mindset; we have lots of small, independent operators who had access to capital, who could try things in a way you wouldn’t if you have two or three state-owned enterprises that dominate your economy. Is it a blip or can it continue? It’s going to continue. Perhaps not at quite the same pace, particularly given the recent drop in oil prices. Extracting oil and natural gas is a complex process, and the industry—by necessity—has become very innovative in figuring out how to produce resources. But there is also a lot of uncertainty about how much U.S. production will grow, particularly given how daily output falls sharply compared with traditional wells, after an initial burst of oil and gas production from a new shale well. We still have much to learn about some of the geology. What has been the impact of this turnaround? The oil and gas boom has been among the brightest spots in the U.S. economy. It contributed to the recent decline in oil prices. It has reduced our import dependence and our trade imbalance, which have important geopolitical and security benefits. Of course, it has raised environmental concerns, which need to be taken very seriously and addressed with the right rules, regula-
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tions and enforcement. It has also raised a host of policy questions, such as whether we should export energy or whether it is safe to move more oil using one of the greatest innovations of the 19th century—trains. Does this mean that we can be less concerned about the events in the Middle East? I don’t think this fundamentally changes the U.S. interest in global energy market stability or the Middle East. If there is a supply disruption in the Middle East, if there is conflict that affects Saudi Arabian oil production tomorrow, the price of oil is going to go up all around the world. That’s going to affect U.S. consumers whether we import a lot of oil or not. And we have many other security and geopolitical interests in the Middle East aside from energy. But, it can give us more flexibility, more leverage in diplomatic negotiations. For example, we see energy playing a bigger role in trade negotiations, with the Europeans pushing for access to U.S. oil and gas. Additional U.S. supplies made it easier for countries to comply with sanctions against Iran by preventing a price rise from lost Iranian exports. What are the implications for the natural gas market? Natural gas typically moves between Point A and Point B through a pipeline and, historically, there were few other options. Point A and B, thus, depend on
each other as buyer and seller. That’s why Europe is so concerned about Russia’s ability to turn off the taps. Over the next decade, however, we are going to see much more sold as LNG that can move on ships, and natural gas increasingly priced based on supply and demand for gas rather than linked to oil. The U.S. natural gas supply has freed up gas for the global market and soon, the U.S. will export LNG. This will contribute to a more integrated global gas market, with more diversity of supply and more competition, which can help improve security of supply. After more than a decade in Washington, D.C. making policy, what’s it like to be teaching? It’s wonderful. The students here are some of the best in the world, and it’s inspiring to see how much passion and energy they have for solving the problems we have been talking about. As pessimistic as one can be about whether our political system is capable of addressing the climate challenge, meeting the world’s growing energy needs, or resolving some of our most difficult geopolitical conflicts, it gives you more than a little bit of optimism to spend time with the students here at Columbia. The amount of talent and the focus they are putting toward trying to tackle these problems is what’s going to make it possible to solve them in the end. Georgette Jasen is a freelance writer and editor.
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Jason Bordoff