Energy's Inextricable Link to Renewal
Posted June 19, 2020
We’ve discussed the historic link between economic growth and energy – chiefly, natural gas and oil, America’s and the world’s leading energy sources. When the economy grows it boosts demand for energy. And when that energy is supplied, growth is enabled or powered. See this blog by API Chief Economist Dean Foreman, in which he describes data behind our confidence that natural gas and oil will be big participants in the nation’s economic recovery.
Indeed, the indicators of this linkage are visible in API’s June Monthly Statistical Report. Based on May data, the MSR records an increase in U.S. petroleum demand of 2.0 million barrels per day, with motor gasoline leading the way. It’s the largest such increase in nearly 45 years.
Americans are getting back to work, and as they do, they need fuel. Likewise, rising fuel demand reflects increased demand for transportation and delivery of goods and services. As our industry meets this demand, growth is enabled.
API’s Frank Macchiarola, senior vice president of policy, economics and regulatory affairs, talked about industry’s role in economic recovery this week on Capitol Hill. The Senate hearing’s subject was COVID-19 impacts on the energy industry, and Macchiarola also addressed industry’s ability to help America get back on its feet and its essential connection with that recovery:
“We remain confident that economic recovery and oil demand are inextricably linked, and we see signs of recovery and demand increases continuing into the second half of 2020. Our industry remains resilient in the face of these challenges and we are committed to providing the affordable, reliable and cleaner energy that people need to sustain everyday life, enhance standards of living and increase prosperity around the world.”
While the speed and scope of the U.S. recovery from the pandemic is uncertain, Macchiarola said, there’s no doubt industry can be counted on to meet energy demand as economies ramp up:
“A strong U.S. oil and natural gas industry is essential to maintaining our nation’s economic vitality. Over the past decade, the emergence of the United States as the world’s leading producer of oil and natural gas has strengthened our energy security and driven economic growth while reducing emissions.”
Macchiarola noted, per a United Nations report, that the world’s population could grow by approximately 2 billion over the next three decades, with world energy usage estimated to increase nearly 50% by 2050, citing figures from the U.S. Energy Information Administration. Under most scenarios, more than half of that demand will be met by natural gas and oil.
These analyses are non-partisan, non-ideological. Their fundamental implications for the future are unchanged by the pandemic. They point to the value of abundant, reliable and competitively priced energy – hence, American strength, resilience and growth.
The virus has made everyone think about what is important and what is essential to their families and daily lives (see API’s new video, here). Energy and energy security are among the essentials, empowering virtually every forward step. Through this lens, U.S. energy leadership is broadly reassuring, no matter how good or bad the news is on the “crawler” at the bottom of your TV screen. America remains strong in large part because of its natural gas and oil. For progress, renewed growth and restored hope.
So, while we don’t yet know whether America’s economic recovery will be a “V,” a “U” or some other shape, whatever it is, safe and responsible development of domestic natural gas and oil will be part of it – energy that’s affordable, proven and reliable. As Macchiarola told senators, our industry is ready to do its part:
“As our nation recovers from this public health crisis and economic downturn, the oil and natural gas industry is committed to providing our nation – and billions of people around the world – with more affordable, reliable and cleaner energy for better years to come.”
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and five grandchildren.
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