IEEJ: April 2011

Special Bulletin

A Japanese Perspective on the International Energy Landscape (37)

April 1, 2011

President Obama Vows to Enhance Energy Security under the Prevailing NewSituation
Ken Koyama, PhD
Director
Strategy and Industry Research Unit
The Institute of Energy Economics, JapanOn March 30, U.S. President Barack Obama made a speech at Georgetown University inWashington on the importance of efforts to enhance U.S. energy security. The speech has attracted
attention due to the importance of the background behind the speech or the problem consciousness
leading to the speech.

At the outset of his speech, President Obama pointed out two new problems involving theU.S. energy security environment or the international energy situation. The first problem covers thedestabilization of the Middle Eastern and North African situation, represented by the Libyan turmoil,and relevant crude oil price spikes. President Obama pointed out that the destabilization of theMiddle East and North Africa represents a great risk to the U.S. economy and citizens that depend onoil and oil imports. As the second problem, President Obama mentioned the devastating March 11Japanese disaster including a terrible earthquake, a catastrophic tsunami and a nuclear emergency.
While mourning the huge damage the disaster inflicted on Japan, as one of the United States' very
important allies and closest friends, he said people in US were deeply moved by the perseverance of
the Japanese people. At the same time, however, President Obama said that “the situation in Japanleads us to ask questions about our energy sources.”

Based on these new developments, President Obama discussed how to enhance US energy
security in a comprehensive manner. Citing his realistic recognition that oil has been an importantpart of the U.S. energy portfolio, he repeatedly emphasized that the United States should reduce its
reliance on imported oil to enhance its energy security. While noting that most of the various energy
security measures, as cited below, would take some time to produce effects, President Obamapresented a goal of cutting U.S. oil imports by one-third in a little more than a decade from some 11
million barrels per day at present.

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President Obama called for achieving this goal by employing various measures including
the development of domestic oil and gas resources, the diffusion of electric vehicles, theenhancement of energy conservation efforts such as the improvement of vehicle fuel efficiencies, thepromotion of high-speed rail and mass transit systems, the development of renewable energies, andstepped-up development and utilization of cleaner energies.

In Obama's speech, two key points – the development of domestic oil and gas resources andthe importance of nuclear power generation – attracted particular attention in regard to the newdevelopments as cited at the outset of this report. On the first point, President Obama recognized theimportance of oil as an energy source and pointed out that an increase in domestic output could work
directly to reduce oil imports, that actual U.S. oil output last year increased to the highest level since2003, that production expansion potentials exist in offshore and frontier regions, and that theexpansion of domestic oil development would contribute to not only enhancing energy security but
also increasing oil industry employment. He noted that these facts would be important. But President
Obama touched on last year's crude oil spills in the Gulf of Mexico and concluded that oil resources
should be developed under tougher safety standards in line with environmental conservation
requirements.

The president also emphasized that the shale gas revolution had given the United States theopportunity to tap large reserves on which the country could depend for a long period of time, citing
as “a century’s worth of reserves”. While noting that natural gas should be extracted safely without
polluting water, in line with environment conservation as well as oil, President Obama interestingly
and clearly indicated that the gas development and use would be an important policy on which somebroad bipartisan agreement can be expected.

On the second point, it is significant for President Obama to have clearly indicated that
nuclear power generation accounts for an important part of the U.S. energy portfolio and would
remain important while putting priority on its safety. He emphasized that nuclear power generation is
an important electricity source, capturing one-fifth of the total electricity output in the United States,
and an excellent energy source that emits no carbon dioxide and contributes to preventing global
warming. At the same time, the president indicated that safety would be the most important point
regarding nuclear power generation and noted that he had requested a comprehensive safety review
by the Nuclear Regulatory Commission to make sure that all of US existing nuclear energy facilities
are safe. He also stated that it was important to take advantage of lessons from the serious Japanese
nuclear plant accident for future U.S. measures.

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As I noted in “A Japanese Perspective on the International Energy Landscape (36),” majorcountries are expected to devise and implement various measures in response to the twodestabilizing factors in the international energy situation. In this respect, it is interesting thatPresident Obama first indicated initiatives and problem consciousness in the United States that leads
the international community. From now on, we may have to pay attention to measures that othermajor countries will take in response to the destabilizing factors.

Contact: report@tky.ieej.or.jp

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