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1 1 (December 1, 2016)

handle is hein.crs/govcewz0001 and id is 1 raw text is: FF.ri E.$~ & December 1, 2016 Domestic Energy Challenges in the 21st Century 0'wie Advances in technology have dramatically increased U.S. oil and natural gas production (Figure 1). This increase has important policy implications for energy markets, infrastructure, security, and the environment. The Energy Information Administration (EIA) projects that electricity demand will continue growing, with generation fuel shifting further away from coal toward natural gas and renewables. An increase in electricity demand would put strain on transmission capacity. How best to leverage all domestic energy supplies (fossil fuels, renewables, and nuclear) to promote economic growth while balancing the economic, environmental, and security tradeoffs inherent to energy use is an enduring question. In the 114th Congress, the House and Senate debated major energy legislation addressing topics such as energy efficiency, pipeline permitting, exports, and energy development on federal land, among other topics. If enacted, S. 2012 would have been the most comprehensive energy legislation in nearly 10 years. The conference committee has met, but there are significant differences in the two versions, including differences over non-energy provisions such as access to and use of federal lands. Expanded domestic oil and natural gas supply through techniques such as hydraulic fracturing and horizontal drilling increase the likelihood of the United States becoming a net exporter of both commodities (U.S. natural gas exports exceeded imports for the month of November 2016), but have also led to concerns over air pollution, water supply and quality, and induced seismicity. These techniques have dramatically lowered natural gas cost and increased supply, which has helped reduce overall power plant emissions, including greenhouse gases (GHGs), and made it uneconomic to operate many existing coal-fired and nuclear power plants. At the same time, cheap, abundant natural gas could forestall movement to even lower carbon options such as renewables and advanced nuclear reactors. Commodity Prices. The expansion of natural gas supply has led to a dramatic drop in prices since 2008 (Figure 2), with implications for many different sectors including electricity generation and manufacturing. Over that time, oil prices remained volatile, but dropped in late 2014, and have remained lower since then. Note that while oil is traded on a global market, natural gas is much more of a regional commodity. International price disparities for natural gas have diminished as more liquefied natural gas (LNG) has become available to global buyers. Exports. Abundant domestic resources also present the possibility for the United States to export large quantities of natural gas and crude oil, although the long-term prospects for further increases in either export remains unclear. With growing U.S. crude oil production and falling prices, there was keen interest in the 114th Congress in eliminating a 40- year limitation on exports of most U.S.-produced crude oil. In December 2015, Congress passed the Consolidated Appropriations Act for FY2016, which included a repeal of the oil export ban. Before the ban was lifted, U.S. crude oil exports averaged roughly 500,000 barrels per day (bpd), mainly to Canada. Since the ban was lifted, exports have generally fluctuated around or below that 500,000 bpd mark, although exports did reach a record level of 662,000 bpd in May 2016. Most notably, the number of countries receiving U.S. crude has expanded, including countries in Europe, Asia, the Middle East, and the Caribbean. Figure I. U.S. Natural Gas and Crude Oil Production 40 , 24Y3 1 X)03 A)95. 2&'? 2009 2011 20OB )Ot BttT4 T:- ni Aug,_s OU M1S Source: Energy Information Administration (EIA). Prepared by CRS. Notes: Bcfld = billion cubic feet of natural gas per day; Mb/d million barrels of oil per day. Figure 2. Spot U.S. Natural Gas and Crude Oil Prices 16 160 -Natural Gas 14 ~ ''rdol 140 12 120 10 100 6 S4t*< . 60 4 #40 2 ' 20 00 2002 2004 2006 2008 2010 2012 2014 2016 $/M MBtu $/bbl Source: Energy Information Administration (EIA). Prepared by CRS. Notes: $/MMBtu = dollars per million British thermal units of natural gas: $/bbl = dollars per barrel of oil. -,{ .. . /,- . :htx- O , - :h x- mppm qq\ a ' p\w gn'a', ggmm I 'S 11LULANUALiN,

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