Gushing about America's Energy Future
December 13, 2012
The United States is on the path to becoming energy independent in the next few decades. Indeed, the International Energy Agency (IEA) projects that U.S. oil production will exceed Saudi Arabia's production by 2020. It further projects that the United States will be energy independent by 2035, says Desmond Lachman, a resident scholar at the American Enterprise Institute.
- Since 2008, U.S. oil production has increased around 25 percent.
- Because of this, oil imports only make up 42 percent of overall oil consumption, compared to 60 percent in 2005.
- The United States is expected to increase oil production to over 11 million barrels a day by 2020.
- As a result, oil imports will decline to 4 million a day.
Natural gas has also been a heavy component of the United States' path to energy independence.
- The United States has overtaken Russia as the world's largest natural gas producer.
- In less than a decade, shale gas production has gone from 2 percent of natural gas production to 37 percent.
The trend toward energy independence can be attributed to major advancements in drilling techniques and increases in fuel economy. The catalyst in these developments was not the federal government, but rather the free market. The free market incentivized innovations such as horizontal drilling and hydraulic fracturing. These new methods have created the ability to tap into vast reserves of oil and natural gas that were not available before. As a result, prices for oil and natural gas have gone down.
There are several economic benefits that the United States enjoys as a result of moving toward energy independence.
- Around 1.7 million oil and gas jobs have been created in the energy sector.
- By 2020, we could expect 3 million new jobs.
- The U.S. trade deficit could be narrowed as natural gas exports increase and oil imports decline.
- Cutting oil imports by 6 million barrels per day by 2020, as the IEA projects, would save the United States about $180 billion a year.
- Furthermore, U.S. manufacturing would be revived.
Moreover, the United States would gain significant geopolitical advantages. For example, it would lower the influence of the Middle East. In addition, the United States would be in a position to challenge Russia's influence in Europe by providing some competition in supplying natural gas.
Source: Desmond Lachman, "Gushing about America's Energy Future," American Enterprise Institute, December 3, 2012.
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