In its capacity as a statistical agency, what does the EIA foresee happening to oil prices, and consequently to gas prices, in the near-term?
Price trends are always very difficult to predict, especially in the US market. Oil, gas and consumption are 3 heavily interdependent areas in North America, even more so than in Europe. The history of exploration in the USA is different, as is that of discoveries and the capacity of businesses to experiment with new technologies and processes. Worth remembering in this case is the story of George Mitchell, dubbed ''the father of shale gas'', who first developed fracking. This technology, which involves a combination of horizontal drilling and hydraulic fracturing, has made it possible to extract increasing amounts of oil and gas directly from the parent rock. That is how Mitchell made his fortune, securing long-term contracts that enabled him to easily beat the cyclical housing, oil and economic crises that are characteristic of the US economy.
What do you think about fracking?
Just like everything else under the sun, fracking has disadvantages, but advances in extraction technology have gotten the situation under control, especially in terms of water safety and public health concerns. The USA is one of the world’s largest shale gas producers (the boom years were 2008-2011). Countries like Argentina, Canada, Colombia, Poland and China are also rapidly making inroads in this new sector. To date, 25% of the natural gas supply in the US is shale gas, and, according to forecasts, that figure could reach 50% by 2030. Thousands of new wells have been excavated in Pennsylvania, Texas and Oklahoma. Others are soon to follow. Actually, the American energy revolution is not just about shale gas, but also about unconventional oil.
What does the EIA expect to see in the future?
Right now, the key factor is the price of crude oil, which has inevitable repercussions on gas prices, a sector in which the USA is aiming to become a net exporter by 2017. It is clear that if gas prices are low, nobody will be interested in shouldering the costs of transporting LNG. However, the EIA’s forecasts are positive. We expect the price of oil to rise, even though it is affected by geopolitics and demand, which in its turn is influenced by the performance of the world’s largest economies. Prices are determined by countless variables, but what history has taught us is that the most important thing is to ensure energy for all. This is the priority for every nation.
What role do renewables have to play?
To use a sports metaphor, in baseball we might think of renewables as excellent pitchers, but it is up to us to get them onto the field. We need investments in research and development to make them less intermittent. The ideal energy solution must perfectly balance sustainability, cost-effectiveness and reliability.