What difference is our nation’s newfound energy abundance making?

Quite a bit, it turns out.

Without the generous new supplies of oil and natural gas currently being supplied from shale and tight rock formations, we’d probably be in the midst of a bona fide energy crisis.

That was one of the messages IHS Vice Chairman Daniel Yergin delivered in his keynote address Monday at the U.S. Energy Information Administration’s 2014 EIA Energy Conference.

Yergin’s speech was a little bit like the movie It’s a Wonderful Life, in which George Bailey’s Guardian Angel showed him what Bedford Falls would have looked like had George never been born. It’s not pretty.

Similarly, according to Yergin, things would be extremely dire today if the combination of hydraulic fracturing and horizontal drilling – pioneered by entrepreneurs like George Mitchell and companies like XTO Energy – had not started to unlock vast new supplies of energy a decade ago.

Turning the 1970s on their head

Some of our older readers will recall that the entire 1970s seemed like one long energy crisis, complete with rationing, gas lines, and White House appeals to put sweaters on and turn thermostats down amid fears of dwindling supplies.

Today’s domestic energy scenario is completely different. U.S. production of crude oil has risen an astonishing 70 percent since the end of 2005. Natural gas supplies are up 45 percent. And earlier this year, the U.S. became the world’s No. 1 producer of oil and natural gas based on energy content.

For perspective on how extraordinary this increase has been, consider last year’s 1.4 million barrel-per-day increase in oil production. It was the 2nd largest production increase by any nation in a one-year period in history, according to BP chief economist Christoph Rühl.

Policies to match the moment

Many of the speakers at the two-day conference echoed these themes, including House Energy and Commerce Committee Chairman Fred Upton. “We are facing a remarkable surplus of supplies,” he said. As a result, “our energy future has never looked brighter.”

Upton made clear we must adjust our energy policies from ones based on stringency and shortage to policies that account for the changed energy landscape. Existing policies to restrict exports of domestically produced oil and natural gas are holding back opportunities to capitalize on our new energy abundance.

Ultimately, a failure to reorient the nation’s energy policies might lead to reduced output, thereby squandering many of the prospects offered by the shale revolution.

Abundance and energy security

Another benefit to relaxing oil and natural gas export restrictions would be the salubrious effect on diplomacy and global energy security. As Yergin pointed out, “How can we say to Japan that it can’t import any of our LNG but must not buy Iran’s oil?”

Similarly, his IHS colleague Jamie Webster made an incisive point about the benefits of increased production: “A barrel of oil anywhere increases energy security everywhere.”

Parts of last year’s EIA annual energy conference were broadcast on C-Span, and other presentations were made available on the EIA website. Let’s hope this year’s sessions get wide distribution – and acceptance – as well.