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Is U.S. Energy Independence Possible?

by Blake Clayton
June 21, 2012

It depends on how you define it.

Take oil, for example. The recent, sustained downturn in U.S. oil imports is already the talk of the town, but to recap: The United States is importing far less foreign oil to satisfy its domestic needs than it was even a few years ago. This trend is very likely to continue in the coming years.

Observing this new reality, commentators have been wrangling about whether the United States will ever become energy independent in oil. Some emphatically say yes, others passionately say no.

The first camp argues that yes, the United States might achieve energy independence in oil in the coming decades, or at the very least, that that prospect isn’t as far-fetched as it once appeared. They forecast that U.S. oil production might overtake consumption one not-too-distant day, and hence that the country will become energy independent.

The other camp disagrees. Even if the United States were to become a net oil exporter, they contend, oil prices in the United States would still be tied to events elsewhere. After all, they note, oil prices are set on a global market. Events in one corner of the world affect oil prices everywhere. To become truly independent—by which they mean, for oil supply and demand abroad to have no bearing on oil prices at home—the country would have to completely cut off oil trade with the rest of the world. Short of that unimaginable scenario, U.S. energy independence will remain a chimera.

Set aside whether you think the country will ever produce more oil than it consumes, or whether becoming a net oil exporter is a worthwhile goal. There’s a more basic point that’s getting lost in this debate: the distinction between energy independence, literally speaking (also known as energy autarky), and energy self-sufficiency.

Is U.S. energy independence achievable? If you define “energy independence” in oil as a United States where the price of a barrel of oil is totally unaffected by oil supply and demand abroad, then no, it isn’t. The chances of that scenario coming to pass are essentially nil.

But if you define “energy independence” as many analysts do—as energy self-sufficiency, or producing more than we consume—then that’s another matter. That’s a scenario that, in my view, is becoming more and more important to consider as a long-term possibility.

So, is U.S. energy independence possible? The answer depends mostly on how you define it.

Post a Comment 4 Comments

  • Posted by Michael Wara

    Blake,

    Why we would want to be energy independent? My guess is that most people in the beltway and outside it value E.I. because they fear the impact of energy commodity price volatility on the overall economy.

    That certainly wouldn’t be helped by a retreat to a US-only energy market (not going to happen anyway, as you point out). It also won’t be helped by what you call energy self-sufficiency. Neither accounts for impacts on the overall economy of energy market dynamics.

    What we care about is the sensitivity of the US economy to changes in energy prices. Maybe the right term to focus on is Energy resilience, or something along those lines.

    Where I live, there is an expression – “F*** Y** Money.” People who have sold their companies and now live in Woodside have this. It affords them the luxury of not taking quite so much account of the opinions of others. That’s the sort of perspective the Energy Independence types would like to have about say, the political future of Saudi Arabia. I’m not confident that energy self-sufficiency accomplishes that.

    [BC: Thanks for the comment, Michael. Great points. Note that this is why I said in the post to set aside the advisability of energy independence as a goal-- my objective was more modest -- to try to shed some light on why people often talk past each other in the popular press about the possiblity of the U.S. becoming energy independent. Debating the value of independence as a policy goal is a whole different matter, as you note, and I agree.]

  • Posted by Michael Q.

    Interesting. This is the first I’ve heard of energy independence being defined as the ability to set the price of energy. I think of energy independence as producing enough energy (or some form of energy such as oil) yourself to meet your needs. A developed nation needs energy like people need oxygen, and we must be able to rely on our own supply in a crunch.
    When I look on the web, others seem to feel that independence means self-sufficiency. Here’s one extended definition I found:
    “The concept of “energy independence” was first introduced by Richard Nixon in November 1973. Three weeks after the Arab oil embargo, Nixon introduced “Project Independence” and pledged that the U.S. would “meet our own energy needs without depending on any foreign energy source” within seven years.”
    We missed the deadline, but the goal remains important.

  • Posted by David B. Benson

    HOwever defined it is certainly possible although possibly costly: use nuclear power plants to generate process heat and electricity. Some of that is then convertable into petroleum products.

  • Posted by Mark Ford

    Regardless of the energy source, if it’s profitable and we are able to heat our homes, run our cars, keep our lights on and hopefully be environmentally neutral or friendly, then it’s good for the US. Americans have responded pretty well to the alternative fuel options. As energy choices become less complicated and our energy diversification points to a more energy “self-sufficient” nation then our exporting potential will explode. The question is: Is this what our policy makers want or Wall Street?

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