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Does “Net Energy Self Sufficiency” Mean Anything?

by Michael Levi
December 13, 2012

A new term has been getting a lot of play in recent weeks. The International Energy Agency (IEA) kicked things off when it projected that the United States will be “almost self-sufficient in energy, in net terms” by 2035. The idea of “net energy self sufficiency” has shown up everywhere from The Economist to Scientific American. Even a State department blog has trumpeted projected developments using similar words.

All of this is enough to make one wonder what net energy self sufficiency means. These reports and analyses all define it the same way: the energy content of whatever energy the United States imports will be less than (or equal to) the energy content of whatever energy the United States exports. “Net imports” will thus be zero or lower.

This sounds lovely but doesn’t actually mean much. I’ve written more than once in this space and elsewhere that oil independence (or oil self-sufficiency) is often overrated. But at least there’s a coherent theory of why the idea might make sense. In an extreme case, if cut off from imports, the United States would still be able to run its economy. Short of that, some will argue, if the United States produces the oil it consumes, its economy will be less vulnerable to price shocks. Whether one agrees or disagrees, there’s a real story to tell.

No such case exists for why “energy self sufficiency” is worth anything. Let’s say that the United States imports five million barrels a day of oil and exports coal and gas with the same energy content. The country is now net energy self-sufficient. (This, qualitatively, is what everyone has been talking about.) Now imagine that there is a crisis and the United States is cut off from world oil markets. Is the country supposed to quickly put its previously-exported coal into its cars and trucks? How about its natural gas? Of course it isn’t. Energy self sufficiency hasn’t bought it any help. What about a spike in oil prices? U.S. consumers are still suddenly spending more money on imported oil. So long as U.S. natural gas prices are unlinked to oil prices, higher revenues from gas sales are unlikely to offset that, even in part. Bigger coal receipts certainly won’t.

In the end, being net energy self sufficient because imports and exports of different energy sources balance is a bit like being net self sufficient in round orange things because you export basketballs and import citrus fruit. It’s a nice idea, but if you’re hungry and cut off from trade, no amount of domestically produced sports equipment will help.

Post a Comment 3 Comments

  • Posted by Jack Rivkin

    Michael,
    As usual you are right on the points made. However, I do think there is significant value to the reduction in the trade deficit which will come from neutral numbers on imports and exports plus whatever manufacturing increases domestically (with some increase in final product exports) because of lower feedstock costs. always a risk if we continue to import liquid hydrocarbons as a part of the equation, of course. On GHG, as a separate topic, we will likely be exporting higher GHG emitting coal more so than the gas. I would also like to see us use a portion of the increased gas we will be producing to create the hydrogen for fuel cells in motive, consumer electronic devices, and back-up or primary power. Big infrastructure build needed in motive but a 60% reduction in well-to-wheel GHG emissions would be an added plus.

  • Posted by AT THE BRIDGE

    Imported energy or not, it looks as tho the USA is headed to war. Figure it out. All we make of value is military machines, polluting aircraft and vehicles and tec. The rest is peanuts. In order to capitalize on our main products we must go to war. The arming of, and spinning the danger of, other puppet nations is convenient for testing the goods. It has been a deliberate concious choice to ignore renewable energy and global warming. Much less than the one percent has made this decision. The rest of you will carry it out for them. I have seen how easily the depleted minions fall into line.

  • Posted by Michael Quinlan

    By the same argument, a positive or negative national balance of trade is meaningless, since we export and import different things. But trade will not suddenly cease, so selling more than you buy from abroad is generally better than not. Same with energy. In a world where trade exists, being a net exporter of energy tends to be better for a nation than to be a net importer. It’s nice to see us moving above that line.

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