The Energy Policy of United States of America - Term Paper Example

Introduction The diversified group of businesses that are supporting producers of oil and gas is influenced by the rise of economic benefits from the improvement of unconventional oil and gas. According to the leader of proving global source of analytics and information IHS Inc., United States is the country where growing and sizeable portion of the benefits oil and gas is being felt by industries. The sector of oil and gas includes petroleum refining and extraction industry of oil and gas. The United States is regarded as the third largest producer of petroleum. Furthermore, in U.S. waters more than 3,950 natural and oil gas platforms and more than 500,100 producing wells are operating. Local, federal and state entities determine the energy policy of United States of America. Additionally, these entities address the subject of energy consumption, circulation and production like gas mileage criterions and building codes. The energy policy of the country includes international treaties, legislation, taxation, guidelines for conservation of energy ad subsidies to investment. The prime purpose of the report is to implement SWOT analytical tool to examine and analyze the impact of examination of alternative gas or oil energy sources on the energy policy of the United States. The paper also critically scrutinized the causes that affecting the contracts and treaties for the oil and gas industry sector. Findings In United States, there have been considerable rate of upsurge in the production of unconventional gas and oil such as tight oil and shale gas. This emergence of the production led to the reduction of oil imports and lessening of prices of natural gas. Moreover, this rapid growth has raised many questions regarding its consequence on the energy sector, industrial competitiveness, macro-economy and energy policy of United States. The energy sources of unconventional oil and gas have foremost planned suggestions towards the future of the natural gas supply in the world. In the era of globalization and advancement of technology, the demand of energy has been raised. The chief contributor towards the lasting solution of the need of energy has been the presence of unconventional oil and gas. The potential of exploration of unconventional oil and gas has provided opportunity to solidify their status towards the rising demand of energy. The following table is the impact of Capital investments and total operational of the natural gas and oil industry on the economy of United States The findings gathered from the table states that the natural gas and oil industry has an enormous positive impact on the economy of the United States (Appendix). Energy Policies of United States In the year 2005, the Energy Policy Act was approved by Congress for the use of alternative fuels and offers tax incentives for preservation. In 2007, Competes Act of America and Energy Security and Independence Act were passed to encourage the development of bio-fuel and increase the requirements of fuel economy. The energy policy incentives of United States include tax reductions, tax breaks, specific funding, rebates and tax exemptions. In the year 2013, the Industrial Competitiveness and Energy Savings Act have been developed to promote efficiency of energy in industry and buildings by approving a grant program and encouragement of identical building codes. Goals of energy policies In United States, the energy policies are forced on protection of the environment, promising secure supply of energy and lowering the cost of energy. Several government programs have been established for the pursuit of the goals. Moreover, the prime purpose of the programs is to enhance the efficiency, expansion of fresh energy sources and promotion of conventional energy sources. Analysis The analysis on the impact of unconventional oil and gas resources on the energy policy of the United States can be effectively presented with the help of SWOT analytical tool. SWOT Analysis SWOT analysis is implemented by providing strengths, weaknesses, opportunities and threats of the project plan. Strengths Strength is based on presenting the benefits of energy policies of Untied States. Job creation- the rise of use of unconventional oil and gas energy sources can help to produce jobs. Most of the policies are based on enhancing the economy of country. The energy policies of United States are based on improvement of productivity, social development and enhancement of health system. Creation of job is the macroeconomic outcome of the application of energy policies. According to the research done by HIS, the effects of unconventional resources are immense, as it added more than 1.7 million jobs in the country. It is also expected that the ratio of job creation is going to increase to 3 million by the year 2020 (Weimar, 2007). Since the year 1972, the prime aim of America is to increase the efficiency of energy and economic development of the country. Federal policies are critical towards job creation. This can be more enhanced by exploration of unconventional oil and gas resources. Safety of workers- safety of workers is another prime focus of the policy. The extractions of natural resources are dangerous and require help of professional. Energy Policy Act of United States also includes excellent safety culture for workers. Two nationwide policies for the safety of the workers are the National Supplement Screening Program and the Building Trades National Medical Program (Lawrence, 2008). The investigation study of renewable resources requires safety of works. The energy policy of the country is also focused for the protection of the workers. Spur investment- Department of Experts stated that policies adopted by the country are based on economic growth and to meet the expected demand. The study of natural resources can help to spur investment in the United States. Foreign investments would contribute towards the growth of the country. Weaknesses Weaknesses are based on the negative impact of study of renewable energy sources on energy policies of United States. Natural hazards- workers are vulnerable towards occurrence of natural hazards. In 2003, Hurricane Isabel has caused huge damage in the North Caroline. It is the south-eastern part of the United States. It has been estimated that more than 550 million dollars has damaged (Grassini, 2009). Many workers had to die for the assault of storm surge. Energy policies of United States are based on the safety of workers. This sudden occurrence of natural hazards can create negative impact on the federal policies. Ecological imbalance- the exploration of renewable resources can often lead to ecological imbalance. The occurrence of this issue can cause huge impact on biosphere and ecosystem. The release of toxic chemicals from industries can lead to the death of microorganism and marine animals. The pivotal purpose of the national policy is to maintain ecological balance. Pollution- there is an upsurge of industries for exploration of unconventional oil and gas resources. The aim of the energy is to maintain environmental sustainability. This can be hampered by search and study of renewable resources. Flexibility- Existing energy policies of United States are not flexible to succeed the market dynamics of new energy like unconventional renewable energy sources. A discussion has been hosted by the National security Program and CSIS Energy on the rapid transformation of energy market of North America. This resembles the fact that, current policies are not flexible to accelerate the advancement of unconventional oil and gas resources. Opportunities Affordable electricity- the extraction of renewable resources can stability the prices of electricity in United States. Investments are required to build efficient renewable facility for unconventional oil and gas reduction. Once the investment are made and facilities are build, then operating cost can be low and fuel would be free for most of the technologies. The priority of policies such as improvement fuel economy standard and establishment of strategy for energy saving and meeting the program of energy efficiency would be fulfilled. Long-term target established by Energy Efficiency Resource Standard Commercialization- the CEO and president of Chamber Institute of United States requested Congress committee to commit United States for commercialization of exploration of oil and gas energy sources. There have not been any meaningful contributions towards introduction of energy policy on oil shale initiatives. Since that time, there has been advancement of technology and alteration on economic market conditions. The Secretary of Energy has been direct by Congress of United Sates to develop a plan that would help for the advancement of commercialization of strategic unconventional oil and gas resources of United States. According to Karen Harbert, the current energy policy of United States in the year 2012 is ignoring the prime values of the resources. The prime value includes huge security shares, creation of jobs and upsurge of revenue. Karen Harbert also stated that under the administration of federal government 83 percentage of federal interior land and more than 86 percentages of federal offshore lands are off the boundaries to study and investigation of unconventional oil and gas energy sources. Introduction of New proposed policy and enhancement of the current energy policy will help to produce oil and gas in United States and add revenue and jobs. Trade in energy resources- the policy makers of United States had to face two paths which include energy leverage and energy stability in the country. The viewpoint of energy leverage pathway is that the advantage of using the tools in the gas and oil production of United States for the wider service of economic and geopolitical purposes (Andrews-Speed, 2004). On the other hand, energy stability is the use of energy benefit for enhancement of energy security. The exploration of unconventional renewable resources and eventually trading of the resources can benefit energy policy makers of United Sates to promote efficiency, adaptability and flexibility in the market. Threats Global recession- the occurrence of global recession has completely altered the economic environment of United States. At the time of recession, it becomes difficult for energy policymakers to develop an integrated platform and strategy to speed up development of unconventional energy sources. In the aftermath of recession, there have been signs of reduction of economic growth of United States. The assessment of renewable energy sources requires high share of investment. OPEC regulation- OPEC is an intergovernmental organization that unifies and coordinates the petroleum policies of the countries that produce oil and gas. The goal of the organization is to ensure steady progress on income and influence the prices of oil globally. Most importantly, this specific organization generally controls the price of oil and gas in global market place. This organization works as a cartel. OPEC is regarded as the one of the prime driver for world economy and worldwide oil production. The energy policies of United States can be heavily affected by OPEC regulation. According to OPEC, the pivotal factors that can create huge effect on the oil market are economic and geopolitical event. Various decision of OPEC can influence the economic growth of United States. Conclusion This can be concluded that the impact of study and investigation of unconventional oil and gas energy resources can create positive and adverse impact on the energy policy of United States. The framework of energy policy is determined by the State and federal Governments of United States. There have been number of subsidies and Government energy policies that have supported the exploration of renewable energy resources. There also has been some criticism about Federal Policies of United States which is used to be dominated by single-shot resolutions and crisis-mentality philosophy. Natural disaster and flexibility sand long run growth can be some of the weakness of the impact of energy sources towards the energy policy of United States. The prime purpose of the Federal policy is to develop marketing effort and policy that can benefit country to raise the profile. There are also certain opportunities of the energy policy are to focus on commercialization and trading in United Sates. The implementation of this process and strategies can benefit country to meet their objective of creation of job and enhancement of revenue. Long-term focus on exploration of energy sources can lead to efficiency of energy. Furthermore, OPEC regulation and global recession and pose threat towards the development of energy policy. References Andrews-Speed, C. (2004). Energy policy and regulations. New Jersey: John Wiley & Sons. Grassini, M. (2009). Energy policy and international competitiveness. New York: McGraw-Hill. Lawrence, R. (2008). International energy policy. New York: Springer. PWC. (2011). Economic impacts of the oil and natural gas industry on the US economy in 2011. Retrieved from: < http://www.api.org/~/media/Files/Policy/Jobs/Economic_impacts_Ong_2011.pdf>. Weimar, N. (2007). Fossil fuels in international energy policy. New Jersey: Pearson. Appendix Indirect and Induced Impacts Direct Impacts Operational Impacts Capital Investment Impacts Total Impacts U.S. total percentage Employment Labour Income ($ billions) Value Added ($ billions) 2,590,700 $203.6 $551.0 5,854,500 $311.8 $522.5 1,388,100 $82.2 $135.8 9,833,200 $597.6 $1,209.4 5.6% 6.3% 8.0% (Source: PWC, 2011) Read More