Prospects for passing some sort of long-term energy policy were good just two years ago, but a lousy economy and some aggressive lobbying by opponents of climate change policy derailed those efforts, and there's no reason to think things will get back on track in 2012.

The closest possibility may be clean energy standards legislation being crafted by Jeff Bingaman, a Democratic senator from New Mexico. But Republicans have already lined up against such a measure, and even existing clean energy policies are being questioned, especially after the failure of the solar cell maker and loan guarantee recipient Solyndra. (See "Solyndra: We Told You So.") Election year politics may force legislators to steer clear of hot button issues like climate change.

In the absence of a comprehensive energy policy, expect increased use of natural gas, which is cheap because of large newly economical resources in the United States, and decreased use of coal, which is the subject of new EPA regulations. Without policy support, or sudden, big improvements to battery technology, it's hard to see electric vehicles taking off quickly, and as the cellulosic ethanol industry has been slow to get going, don't expect biofuels to make a big dent in gasoline consumption. Indeed, the country may grow yet more dependent on oil as large new resources are exploited in places such as North Dakota and Texas, and friendly neighbors such as Canada. Some experts are starting to suggest that within a decade or two, the Americas would no longer need to import any oil. That might sound good, but oil prices will still depend on the worldwide market for oil—as long as demand is growing as it has been in recent years, prices will stay high, and volatile, even if the U.S. starts sending more money to Brazil and Canada and less to the Middle East.

Looking ahead, we can also expect to see more failures in the solar industry, as low prices force many out of business. One thing that will be interesting to watch is the extent to which the survivors manage to succeed, even in a climate of reduced government incentives. The U.S.-based solar panel manufacturing giant First Solar recently announced that it plans to stop targeting fickle subsidized markets, and instead sell to places where its technology makes economic sense on its own merits. Prices for solar panels may have decreased enough in recent years that the industry can survive on its own--serving areas with lots of sun and high electricity prices—albeit at a smaller size than it could with government support.

This week ExxonMobil announced a major oil find: an estimated 700 million barrels of oil in the Gulf of Mexico. It made the announcement after a drilling ban in the Gulf was lifted. The discovery provided an occasion for renewed calls to change government policies to promote drilling of domestic oil.

From Reuters:

(The discovery) speaks to the fact there are resources in the Gulf and if we have a tax and regulatory environment that will encourage us to find and produce our own domestic oil, the industry will respond," said Mark Routt, an energy industry consultant with KBC Advanced Technologies.

According to Bloomberg, that's "the biggest discovery in the region in 12 years."

The Chairman of the House Natural Resources Committed, Doc Hastings (R-Washington) said the find showed the importance of increased drilling offshore:

Today's oil and natural gas discovery in the Gulf of Mexico is a significant step forward for American job creation and energy production. This is the exact reason why Republicans have been pressuring the Department of the Interior to issue offshore permits—America has abundant oil and natural gas reserves, we simply need to allow the hardworking men and women in the energy industry to do their job.

The Wall Street Journal celebrated:

Exxon Mobil Corp.'s huge new oil discovery in the Gulf of Mexico is good news for domestic energy production, but it's even better news as a sign that last year's panic over the BP spill won't continue to cripple American offshore oil exploration.

The Times-Picayune opined:

[The discovery] shows why the Obama administration needs to ramp up the approval of safe drilling permits.

But not all were pleased.One blogger started out jubilant . . .

Yay! Energy problems solved! We can tell those OPEC thieves to go KISS OUR GRITS!

Then ended on a more sober note after noticing that the find amounts to only a month's supply of oil (37 days based on 2010 Energy Information Administration figures).

Anyone got a horse (with buggy) we can buy? Cheap.

Here's a little more perspective, again from Reuters:

Irving, Texas-based Exxon had reserves of 24.8 billion barrels oil equivalent at the end of last year.

In other words, the huge find boosted Exxon's reserves by only 3 percent.

Climate activist Joe Romm wrote:

The discovery doesn't prove we have 'abundant' oil reserves, as Hastings claims. It proves the exact opposite, that 'Drill, Baby, Drill' can't solve our problems.

Natural gas burns cleanly, emits half as much carbon dioxide into the atmosphere as burning coal, and is extremely plentiful—especially due to new extraction technologies such as fracking. It seems like a perfect fuel for battling climate change.

But natural gas won't be enough to reach emissions levels thought to be necessary to keep warming below two degrees, according to a new report (pdf) from the International Energy Agency. What's more, it could have the negative effect of delaying the deployment of renewable power sources that could help reach those targets.

The report warns that cheap natural gas could cause government support for renewable energy, which has taken the form of mandates and other incentives, to waver.

Renewable energy is supposed to become more competitive as fossil fuels rise in price, due to increasing demand. But abundant new natural gas supplies, such as in the Marcellus Shale in the United States, could help keep natural gas cheap.

The report says that "lower gas prices may put pressure on some governments to review their policies and level of support" for renewables. In a press release, IEA executive director Nobuo Tanaka said: "Its increased use could muscle out low-carbon fuels, such as renewables and nuclear - particularly in the wake of the incident at Fukushima and the likelihood of a reduced role for nuclear in some countries. An expansion of gas use alone is no panacea for climate change."

So, if natural gas does erode support for renewables, it could delay the cost reductions that come with it, making it even harder for renewable power to compete.

Natural gas could, however, be good for energy security, since natural gas is widely distributed around the world, the report said. If production were developed around the world, it would make it less necessary to rely on sometimes fickle suppliers, which in particular have left Europe vulnerable to supply disruptions.

The report notes that demand for natural gas is expected to be particular strong in China, which in its 12th Five-Year Plan called for the tripling of natural gas consumption.