The Land of Plenty
Obama's State of the Union address highlighted good news for U.S. oil production. But is America really on the path to energy independence?
In his State of the Union address last night, President Barack Obama spoke of the United States' unaccustomed new impact on global energy -- in addition to its habitual role as a world-class oil glutton, the U.S. is delivering a growing volume of oil and natural gas that has already shaken assumptions, and looks likely to roil geopolitics in a way favorable to Americans.
In his State of the Union address last night, President Barack Obama spoke of the United States’ unaccustomed new impact on global energy — in addition to its habitual role as a world-class oil glutton, the U.S. is delivering a growing volume of oil and natural gas that has already shaken assumptions, and looks likely to roil geopolitics in a way favorable to Americans.
The speech put a spotlight on a new trend of plenty in the U.S. oil patch: On Monday, the U.S. Energy Information Administration reported that the U.S. is in the midst of a dramatic turnaround — by the year 2035, U.S. demand for imported oil will have fallen by 18 percent, to some 7.36 million barrels a day, or a respectable 1.6 million barrels a day less than last year’s volume.
Obama was citing the shift as a way to outflank Republican opponents and oil industry lobbyists who, as we’ve discussed, intend to spend outsized sums of campaign dollars on claims that he is choking oil production and jobs creation. Against that, Obama threw the oil and gas bonanza into a package, and said that the U.S. must both drill and spend much on futuristic clean-energy technology. The Republican response, by Indiana Gov. Mitch Daniels, suggested that Obama is an anti-oil ideologue.
That is politics, and we are sure to hear much on this subject from both sides through November. What is most interesting from my own standpoint is the sober feel of the EIA’s findings after the growing accumulation of punch-drunk forecasts from others: From an array of our best energy minds — at ExxonMobil, BP, Daniel Yergin’s CERA and others — we have heard that, with the help of Canada and Mexico, the U.S. on the verge not only of the bright future described by the EIA, but of achieving the mythical state of energy independence (strike the operatic score.). These Wise Men foresee a doubling of North American production to a whopping 22 million barrels a day.
Among the geopolitical impacts of such a shift would be far more proportional influence from Middle Eastern and other petro-potentates. There would be more political balance.
While reporting on the EIA’s competing numbers, the Washington Post’s Brad Plumer and the Financial Times’ Javier Blas caution that the agency’s statistics may sometimes be suspect. That may be so, but what of the more enthusiastic findings from the sources mentioned above? I myself have cast doubt on them. Ultimately, everyone is conjecturing, and it seems to me that there is much to counsel in the way of restraint.
For its part, the EIA skips the politics and the glad assertion of freedom from Middle East oil. It lays out in cool language a more modest yet remarkable U.S. energy reversal of fortune. It says that U.S. oil production will rise by 21 percent over the next decade — from a current 5.5 million barrels a day to 6.7 million barrels a day in 2020; then production will fall off to 6.1 million barrels a day, and stay there through 2035. This includes 1 million barrels a day from the various new sources, such as oil shale and new Gulf of Mexico production, adjusted for natural depletion; plus an additional 1 million barrels a day of biofuels (the more optimistic scenarios suggest some 4 million barrels a day in additional biofuel production, mainly corn and sugar ethanol).
U.S. oil demand will rise a bit over the period, the EIA says, yet by 2035, net imports will fall to 36 percent of total U.S. consumption from 49 percent in 2010.
The thrust of the reports as a whole is positive — U.S. balance of payments would improve to great economic salutary effect. The trouble happens when groups with other interests and big narrative imaginations get ahold of the numbers.
More from Foreign Policy
Chinese Hospitals Are Housing Another Deadly Outbreak
Authorities are covering up the spread of antibiotic-resistant pneumonia.
Henry Kissinger, Colossus on the World Stage
The late statesman was a master of realpolitik—whom some regarded as a war criminal.
The West’s False Choice in Ukraine
The crossroads is not between war and compromise, but between victory and defeat.
Washington wants to get tough on China, and the leaders of the House China Committee are in the driver’s seat.