This week a bipartisan group of some of the most influential government and national security leaders of the past thirty years announced the formation of the United States Energy Security Council—and they see a major role for shale gas in America’s future. The Council (whose members include former Secretary of State George P. Shultz, former Secretaries of Defense William J. Perry and Harold Brown, Alan Greenspan, a former C.I.A. director, and two former Senators) was formed around a familiar concept that has been floating around Washington for some time: open the transportation fuel market to competition from sources other than petroleum to weaken the power of foreign oil. The Council argues that America’s foreign policy and economic problems will only get worse the higher oil prices rise (which they say senior oil executives see as inevitable) and the longer the transportation sector is reliant predominantly on petroleum-based fuel. The solution according to the Council: have Congress require that new vehicles be flex fuel, which will unleash pent up investment in domestic alternative fuels production. This is where shale gas comes in. The Council argues that if the economics of natural gas remain favorable due to shale gas extraction (i.e., fracking), widespread use of methanol (which can be converted from natural gas) will play an important role in fueling these new vehicles.
As the Council recognizes, there will be those that decry government interference in the marketplace, as evidenced by the American Energy Alliance’s Thomas J. Pyle’s article on Wednesday. Regardless, the fact so many influential national security and economic leaders have formed this new bi-partisan group speaks to the potential game changing impact newly discovered shale gas resources are having on America's energy and national security policies. The Council's formation should be welcome news for the natural gas sector and those investors concerned with creating an economically viable, domestic alternative fuels infrastructure.