Forum Host Bill Raisch: Jim, you’ve served both in the U.S. Department of Energy and the U.S. Department of Homeland Security with a special focus on the public-private interface.
What do you see as one of the most important disruptors facing global corporations, markets and/or wider society?
Jim Caverly: The changing dynamics of energy supply and pricing due to the boom in natural gas supply resulting from fracking. In its early stages the disruptions are principally US domestic, as fracking expands internationally it has the potential to disrupt both individual foreign markets and the entire international marketplace.
Bill Raisch: What are the potential impacts of this energy disruptor?
The US becomes a net exporter of energy – something no energy analyst would have credibly predicted over much of the past 50+ years – US LNG import terminals are converted to export terminals.
Natural gas will be the energy hallmark of the 21st century just as oil was for the 20th – post Fukishima nuclear revitalization is delayed.
As the Green House Gas preferenced fuel, natural gas will place significant stabilizing to downward pressure on both coal and oil prices.
Geo-strategic dependencies change as new producible (frackable) reserves of natural gas come on line, especially in Europe, reducing the demand/value of natural gas from Russia, Iran, and other producers.
Long term decreases and stability in US natural gas prices revitalize domestic energy intensive industries such as chemical manufacturing as investment and production return to the US.
Significant increases in use of natural gas use will impact the production of Green House Gases as well as the growth in demand for and use of coal and oil – further complicating the climate change debate/policies.
Bill Raisch: What strategies would you suggest to address this energy supply disruptor – to either mitigate negative impacts and/or to capitalize on potential opportunities?
Jim Caverly: Many to most of the impacts on or in the US domestic market are already identified and factor into strategic planning – one key will be to anticipate and recognize these impacts in foreign venues as fracking penetrates overseas.
One that I’m still toying with is potential impacts and rifts from the difference between the US approach to natural resources and China’s approach to them. US thinking and policy from the mid 70’s, principally driven by oil considerations, has been to increase the resource, i.e. drill and produce more, and to assure free and equal access wherever it is in the world. China’s philosophy has been to acquire and control the resource and the means of production, i.e. buy up/into the resource, invest in its production to supply their domestic demand. What happens when/if China begins to restrict access to these resources to meet its domestic needs versus letting the resource go to the highest bidder on the international market?
Posted by Bill Raisch, Host – Global Disruptors Forum