As conversations around the ‘Green New Deal’ heat up in Congress and the United States becomes a net exporter of oil and liquefied natural gas, this month we examine the current energy profile of the United States and some of the trends that have put our economy on the most stable energy footing since the industrial revolution.
It happened quickly, and many people are not even aware of it. The United States is no longer dependent on oil from the rest of the world. As a matter of fact, we are currently the world’s largest global crude oil producer and a net exporter of the ‘black gold’. This is a dramatically different situation than what we saw for much of the last 50 years, especially for those who remember the oil embargo and gas lines of the 1970’s, when the whims of foreign powers could bring the US economy and transportation infrastructure to its knees.
Figure 1: Crude oil Production 1996-2018
The United States surpassed both Russia and Saudi Arabia as the world’s largest producer of crude oil around the middle of 2018.
It is with this backdrop that the fight in Congress over ridding our economy entirely of petroleum products is playing out. It shouldn’t come as a surprise that there is significant push back against moves to kill an industry that we have just begun to dominate, especially one as important to national security and geopolitical relations as energy.
Figure 2: US net imports of crude oil and refined petroleum products
The precipitous decline of imports began around 2007 and has accelerated every year since. At the height of our import dependence, we were bringing in a net of more than 12 million barrels per day. An astronomical need, with which the producing countries held significant leverage over us.
How have we come to be in this position? It is all thanks to one of the most important innovations of the 21st century, the technology for extracting oil and gas from previously unyielding shale rocks. In a Financial Times article, Mark Papa, a former CEO of EOG Resources said, “If you had taken a poll in 2005 of 1,000 industry executives, 999 of them would have said you cannot flow oil commercially through shale.” By 2009, Papa was able to announce to investors that it had found 900 million barrels of reserves, and that they could extract it from shale at a profit.
We won’t get in to the very legitimate environmental arguments of fracking and oil production here, but there is no doubt that the economic, national security, and geopolitical impact has been immensely positive to the United States and the power of that force will be difficult to counter. Another rarely sited aspect of this debate is that the United States is already the global leader in emissions reduction while also bringing on a significant capacity in renewable energies.
Figure 3: Largest reductions and increases in emissions by country 2017
One of the principal criticisms of the Paris Climate Accord was the delay in reductions by China and India until the 2030’s, which are the two countries responsible for almost all of the current global emissions increases. The United States is already the global leader in cutting emissions by far.
Figure 4: New electric generating capacity build by fuel type
The majority of new energy production capacity being brought online in the US is renewable. The rest is natural gas. There is virtually no new coal, nuclear, or oil electric production capacity being brought online in this country.
Figure 5: US energy consumption by source, 2017
While renewable sources currently account for only about 11% of US energy consumption, that will continue to grow as more renewable generation facilities are brought online. However, petroleum and natural gas are still accounting for the majority share of consumption.
As we move forward in the 21st century, it is in the undeniable best interest of the United States to not only continue strengthening our position of energy independence, but also to lead the way globally in cutting emissions and bringing new renewable energy sources online. What many people don’t know, and what many won’t tell you is; we are already doing all three.
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