U.S. energy policy

The energy policy of the United States is set by the president and guides both the recommendations of the executive to Congress and the instructions issued by the executive to the cabinet. Twenty-first century energy policy has dealt largely with the question of the best ways to transition from an economy dependent on foreign oil and other polluting sources of energy to an economy that produces its own, cleaner energy.

Background

US energy policy addresses issues of energy production, consumption, and economic and environmental impact. The direction of the policy is established by the president, defined by legislation, acts, treaties, tax codes, subsidies, and other government actions. Eighteenth century policies were primarily concerned with timber for heating and industry and were directly tied to at the federal level. In the nineteenth and twentieth centuries, natural gas, coal, and oil dominated energy concerns. Around 1950, oil overtook coal as the most consumed energy source and continued to gain importance as highways made the automobile the preferred mode of transportation. In the second half of the twentieth century, nuclear power was added to the nation’s energy concerns.

Natural Gas

In the nineteenth century, natural gas was widely used as lighting fuel until the advent of electricity in the 1890s. Later on, the development of steel pipelines allowed for large quantities of natural gas to be safely transported over great distances, resulting in the modern natural gas industry. The first natural gas pipeline, which was more than 320 kilometers in length, was built in 1925, connecting Louisiana to Texas. Thereafter, U.S. demand for natural gas increased with rapidity, especially at the conclusion of World War II. Between 1906 and 1970, residential demand for natural gas grew fifty-fold. The passage of the Natural Gas Act in 1938 allowed the Federal Power Commission to determine interstate prices for natural gas. The United States was self-sufficient in natural gas until the late 1980s when consumption began to significantly outpace production, and the need for imports increased.

The US economic slump of 2009 contributed to a decrease in domestic natural gas consumption, especially in the industrial sector, resulting in lower prices. In June 2009, estimations of US reserves of natural gas were revised upward by 35 percent to 58.736 trillion cubic meters. The Energy Information Administration (EIA) estimates that US domestic consumption and production of natural gas will increase as a result of greater demand for electricity.

Net imports were projected to decrease from 16 percent in 2007 to less than 3 percent in 2030 because of the increasing use of onshore resources in Alaska and offshore reserves in the Gulf of Mexico. In 2022, the US production of natural gas at 1.029 trillion cubic meters and consumption was 914.30 million cubic meters, allowing the country strategic independence in terms of this natural resource. This is largely due to a consistent increase in horizontal drilling and hydraulic fracturing techniques which began in 2005, allowing Texas (24.6 percent of production) and Pennsylvania (21.8 percent of production) to lead the nation in natural gas drilling. In 2022, the Annual Energy Outlook predicted the majority of the country’s ample natural gas would be sourced from shale and tight gas resources through 2050.

Coal

Prior to 1800, the amount of coal consumed in the United States was an estimated 98,000 metric tons, much of it imported. The demand for coal expanded slowly, and it was not until 1885 that the United States burned more coal than wood. However, the advent of the Industrial Revolution—and the expansion of the railroad system in the mid-1800s—initiated a period of increasing production and use of coal that continued. In 2007, U.S. production of coal reached a record 1.06 billion metric tons (1.16 billion tons), second only to China.

Producing 27 percent of the global coal supply, the United States has the world’s largest reserves of coal, totaling 444 billion metric tons in 2008, increasing to 491 billion by 2023. Plentiful and inexpensive, coal generates about nearly 20 percent of the electricity in the United States as of 2022. Because of the rising cost of constructing and operating coal-fired plants due to clean air standards, US policy on coal focuses on research and development of clean, efficient, and price-competitive technology for domestic use and for export. In the early 2000s, coal-generated electricity was predicted to decrease by 4 percent by 2025 but increase once more as new plants are constructed in 2030.

In 2022, the US produced 548.840 million metric tons, consumed 476.044 million metric tons, and exported 80.081 million metric tons of coal. Primarily, five states were responsible for mining US coal: Wyoming (41 percent), West Virginia (14 percent), Pennsylvania (7 percent), Illinois (6 percent), and Montana (5 percent).

Oil

The modern petroleum age began in Pennsylvania in 1859 when “Colonel” Edwin L. Drake’s homemade drilling rig struck oil. The rapid acceptance and use of the internal combustion engine in the late 1800s increased demand for oil in the US and globally. Until the 1950s, the United States was self-sufficient in petroleum with 22,268 billion barrels (bl) of proven reserves, which had risen to 38,212 billion bl by 2021.

For the first time in 1994, the United States imported more petroleum than it produced. However, this dependence peaked in 2005, and by 2012, the country was again a net exporter of petroleum. Investment in new technologies such as hydraulic fracturing(fracking) allowed major increases in domestic production.

In 2008, total petroleum consumption in the United States decreased by 1.2 million barrels per day (bl/d), the steepest drop since 1980. This drop paralleled a decrease in the price of crude oil, which fell steeply. As a result, the Organization of Petroleum Exporting Countries (OPEC) agreed to production cutbacks. With demand for liquid fuel expected to rise by just one million bl/d from 2007 to 2030, in addition to the greater use of domestic biofuels, as well as increasing domestic oil production, the net import of total liquid fuels was predicted to decrease by 40 percent by 2025.

From 2018 to 2021, the US led the world in crude oil production, with 32 states contributing to production. Texas was responsible for the majority of production (42.4 percent in 2021). In 2023, the total production of petroleum was 20.879 billion barrels per day, and consumption was 20.246 billion barrels per day. Though the U.S. was the largest producer in 2021 at 14.5 percent, Russia was a close second, producing 13.1 percent of the world’s supply.

US Energy Policy in the Twentieth Century

At the beginning of the twentieth century, conservationist Theodore Roosevelt, the twenty-sixth president (1901-1909), preserved U.S. national forests and parks, as well as oil, mineral, and coal lands. His cousin, Franklin Delano Roosevelt (FDR), was elected in 1932 during the Great Depression. In 1941, during FDR’s presidency, the United States joined forces with the Soviet Union and Great Britain and entered World War II. Franklin Delano Roosevelt’s successor, Harry S. Truman, ordered the atomic bombing of Hiroshima and Nagasaki in Japan, ending World War II. However, the use of nuclear weapons resulted in one of the worst human-made environmental disasters and long-term radioactive contamination. Twenty years later, John F. Kennedy, the thirty-fifth president (1961–1963), facilitated the Limited Nuclear Test-Ban Treaty, and in September 1996, the United Nations adopted the Comprehensive Nuclear Test-Ban Treaty.

In the early 1950s, the United States and Western Europe became net importers of Middle Eastern crude oil. It was thought that nuclear power would provide a less expensive alternative to oil. In 1959, President Dwight D. Eisenhower (1953–1961) attempted to dampen the country’s reliance on foreign oil with the Oil Import Program, which limited imports of crude oil east of the Rocky Mountains. However, the American appetite for costly fossil fuels was unabated, culminating in the oil crisis of 1973. Richard M. Nixon, the thirty-seventh president (1969–1974), imposed mandatory price controls on twenty-three of the largest oil companies and later instituted a sixty-day country-wide price freeze. Following the Arab-Israeli war of 1973, OPEC raised the price of oil by 70 percent and embargoed oil shipments to the U.S. and countries friendly to Israel. Gasoline prices dramatically increased in the United States, thereby reducing demand for large, American-made, gas-guzzling automobiles and increasing the popularity of compact cars.

In 1979, the overthrow of the Shah of Iran by Islamic revolutionaries led to yet another Middle East crisis. Five hundred Iranian students seized the American embassy in Tehran, detaining fifty-two hostages for more than two years. President Jimmy Carter (1977–1981) halted oil imports from Iran and froze Iranian assets in the United States. Diplomatic efforts to rescue the detainees and an attempted US military rescue mission failed. Though President Carter brokered a peace treaty between Egypt and Israel, he lost the 1980 presidential election to Ronald Reagan. President Reagan facilitated the Intermediate Nuclear Forces (INF) treaty with the Soviet Union. However, in 1987 during the Iran-Iraq war (1980–1988), US officials in the Reagan administration brokered a sale of arms to Iran in exchange for hostages, the so-called Iran-Contra scandal.

President Reagan’s successor, George H. W. Bush, later engaged the United States in the Gulf War in the oil-rich Middle East involving Kuwait and its attacker, Iraq. Under his watch, the Clean Air Act of 1990 was passed, affecting energy use and related pollution. In 1997, the Kyoto Protocol was set forth by the United Nations to address climate change. Although Bill Clinton, the forty-first US president (1993–2001), approved of the Kyoto Protocol, the United States did not ratify the treaty. President Clinton promoted globalism and increased US trade via the North American Free Trade Agreement (NAFTA). In 2008, President Clinton’s vice president, Al Gore, was awarded the Nobel Prize for his work on climate change.

US Energy Policy in the Twenty-first Century

George W. Bush was elected the forty-third US president (2001–2009), and once more, the United States focused on the Middle East, including the 2003 invasion and subsequent occupation of oil-rich Iraq. At the end of the first decade of the twenty-first century, the United States aimed to end the war in Iraq while confronting the US dependence on fossil fuels and its environmental consequences. President Bush embraced federalism and advocated state rights.

He believed individual states, cities, and industries should facilitate their own measures to combat global warming. His laissez-faire policy translated into an attenuation of federal regulation of industries regarding air and water pollution. Globally, the Bush administration chose not to ratify the Kyoto Protocol because it differentiated responsibilities between industrialized Annex I nations, such as the United States, and developing, non-Annex I nations, such as India and China.

During Bush’s presidency, the United States became the largest purveyor of biofuels. His policies aimed at increasing the use of renewable energy including the Renewable Electricity Production Tax Credit, the Renewable Portfolio Standards (RPS), and the Renewable Energy Certificates/Credits (RECs). President Bush signed into law the Energy Policy Act of 2005, which encouraged energy conservation and efficiency through the modernization of the energy infrastructure and diversification of the U.S. energy supply, including nuclear energy development.

Two years later, the 110th US Congress passed the Energy and Security Act of 2007 with the aim of increasing the production of clean, renewable fuels and enhancing the “energy performance” of the federal government. In early 2009, President Bush designated 505,736 square kilometers of U.S. Pacific Ocean reefs, islands, surface waters, and seafloor as “marine national monuments,” thereby restricting fishing, oil exploration, and mining in the region. The outgoing Bush administration supported a plan to make available 3.6 million hectares in Utah for energy exploration, such as prospecting for minerals. At the end of President Bush’s term, the Environmental Protection Agency (EPA) began an “aggressive review” of mountaintop coal mining permits, expressing concern about strip mining procedures that blast the tops off mountains, spewing rocks and waste into surface water in violation of the Clean Water Act of 1972.

President Barack Obama, the forty-fourth US president in 2009, came into office with promises to change US energy policy to better address problems such as climate change while confronting wars in Iraq and Afghanistan, a slumping economy, and an unsustainable dependence on oil imports. In February 2009, Congress agreed to a $787 billion package of tax breaks and funding called the American Recovery and Reinvestment Act of 2009 (ARRA). President Obama’s energy agenda allotted more than $20 billion for tax incentives for renewable energy providers and activities that encourage the use of renewable energy sources. About $1 billion was allocated to the National Aeronautics and Space Administration (NASA) and $1.6 billion to the Department of Energy for research and development in climate science.

President Obama called on Congress to put forth legislation to place a market-driven cap on carbon and increase the production of renewable energy. Of note, the Clean Air Act of 1990 preceded the first highly successful “cap and trade” program in the United States, which mandated a 50 percent decrease over ten years in sulfur dioxide emissions produced by the coal and petroleum industries. In addition, President Obama’s $800 billion economic stimulus proposal included $50.8 billion for energy and water development, $20 billion of which was allocated for building a smart-grid power network and a high-tech infrastructure to draw upon renewable energy sources—such as wind turbines and solar panels—which could handle uneven energy production.

On February 24 2009, a federal appeals court ordered the EPA to reconsider the standards regulated by the Clean Air Act it had adopted in 2006 for the pollutants and fine particles associated with heart and lung diseases. In 2006, EPA scientists recommended that allowable levels for fine particles be adjusted downward, though the action was not taken. In April 2009, the EPA officially proposed that GHGs be considered a danger to public health and welfare in response to a Supreme Court decision in 2007 that found GHG emissions to be subject to federal Clean Air Act standards.

President Donald Trump, the forty-fifth president, shifted American energy policy priorities from reducing carbon emissions to the pursuit of energy independence. Many environmental rules and regulations previously put in place to reduce fossil fuel use were reversed, including replacing the Clean Power Plan with the Affordable Clean Energy rule, repealing the Federal Coal Leasing Moratorium, repealing Section 401 of the Clean Water Act, repealing the Stream Protection Rule, revising the Environmental Protection Agency’s (EPA) steam electric and coal ash rules and the withdraw from the Paris Climate Accord. For the first time in sixty seven years, annual gross exports of energy exceeded imports.

One of the top priorities of President Joe Biden, the forty-sixth president, was to take action on climate change by rejoining the Paris Climate Agreement and proposing funding for renewable energy with an infrastructure bill. The Defense Production Act (DPA) was enacted to accelerate the production of clean energy technology, and the Biden-Harris Permitting Action Plan established a five-agency collaboration to use public land to create clean energy products. These were part of the Biden Administration’s plan to cut America’s emissions by 50 percent by 2030.

Key Concepts

• alternative energy: fuels and other energy resources that are renewable, nonpolluting, or both and have the potential to replace fossil fuels and other traditional energy resources
• energy independence: the ability of a nation to generate energy sufficient for its needs domestically, without relying on foreign imports
• fossil fuels: energy resources formed from decayed under geological pressures over millions of years
• greenhouse gases (GHGs): atmospheric trace gases that trap heat, preventing it from escaping into space
• policy: the broad set of principles guiding governmental actions and legislation in a specific arena, such as energy or foreign affairs

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