Does the US really need an energy policy?: ever since the Arab oil embargo of 1973, the U.S. has still not developed a national policy to manage its dependence on energy--particularly from foreign, unfriendly sources. What are the roadblocks to such a policy and what steps are being taken to provide more certainty to businesses?

• Author: Barlas, Stephen
• Position: ENERGY

Sen. Joe Manchin was frustrated. Midway through a two-hour hearing of the Senate Energy and Natural Resources Committee on Nov. 8, the West Virginia Democrat was taking out his ire on Chris Smith, deputy assistant secretary of Energy for Oil and Gas in the Office of Fossil Energy. The hearing was held to discuss whether DOE should approve applications for U.S. companies to export liquid natural gas (LNG).

[ILLUSTRATION OMITTED]

[ILLUSTRATION OMITTED]

Just half a decade ago, LNG import terminals were popping up like dandelions in American coastal ports amidst spreading industrial user panic over sky-high domestic prices and disappearing supplies. But toward the end of this century's first decade, that gas gloom lifted without warning and with nary an assist from the U.S. government.

Because of an innovative technology called horizontal drilling or fracking, natural gas started flowing from the Marcellus (stretching across New York, Pennsylvania, West Virginia, Ohio and Maryland) and Barnett (in North Texas), plays like champagne from bottles uncorked on New Year's Eve. Gas prices dropped precipitously.

The Energy Information Administration (EIA) now estimates that the U.S. produces five billion cubic feet a day more of natural gas than what consumers can use, with the result that prices have dropped from a high of $12.69 per million BTUs in June 2008 (the average for that year was $8.94) to $3.60 m/BTUs in October 2011

Manchin had just asked Smith a question about whether foreign ownership of wells in the Marcellus formation lapping across Pennsylvania and New York could impact the domestic price of natural gas if those foreign owners decided to sell "their" gas overseas. Smith tried to answer. But an impatient Manchin interrupted. "It is fa] shame this country doesn't have an energy policy, that is all I am saying," he said.

Just half an hour earlier, though, at the very same hearing and from the very same dais, Sen. Lisa Murkowski (R-Ala.), the top Republican on the panel, had made the opposite point. Naming Marcellus, Utica [Ohio to Pennsylvania and across the Canadian border], Barnett and other shale plays, she emphasized, "I don't think we should fool ourselves. The government didn't make this happen. The natural gas resource is proving out without any mandate, without any tariff or moratorium, without so much as a tweak in any law or regulation."

Ever since the Arab oil embargo of 1973, one U.S. president after another has paid at least rhetorical attention to the need for the federal government to develop an energy independence policy. Last March 30, in a speech at Georgetown University, President Barack Obama announced...