Energy "Independence" and Exporting Debate on the Horizon
Talk of whether or not the United States’ natural gas holdings are bringing the nation closer to energy independence hasn’t been a true top-headline-grabber to date. That could change though as the push seems to be growing that is calling for the exporting of liquefied natural gas products in the near future as well as proclamations of some type of energy renaissance. However, some analysts believe talk of “independence” is way off the mark even as steps (perhaps baby steps) have been taken.
A bipartisan group of lawmakers including Sens. James Inhofe and Mary Landrieu addressed U.S. Department of Energy Secretary Steven Chu last week in a public letter highlighting the findings of the NERA Economic Consulting Report on natural gas exporting. The lawmakers attacked critics of increased exporting of natural gas and expansion of production amid report findings that it would be in the best economic welfare of the country to do so. They also note that production is expected to well outpace demand as infrastructure needs catch up, meaning price gouging on domestic turf remains somewhat unlikely.
Days later, the American Petroleum Institute – who noted “an energy revolution is underway in the U.S. – rolled out an increased media campaign talking of the job creation benefits of exporting natural gas. Meanwhile, U.S. Energy Information Administration noted the country’s energy intensity, the amount of energy it takes to produce $1’s worth of economic output, continues to drop for a number of reasons. Part of that stems from changes in U.S. energy production and consumption as well as structural economic changes. However, NACM Economist Chris Kuehl, PhD, is among many suggesting that those talking of energy independence should pump the brakes a bit, so to speak.
Kuehl noted in a recent column for FCIB that all the talk of more energy independence, including the boost in domestic oil production, fails to address that the United States still imports huge amounts of oil. He estimated that of the 20 million barrels per day consumed domestically, about 14 million barrels come from international sources. About 25% of that comes directly from the Middle East. That’s only likely to grow as when the economic recovery, long stalled, actually kicks into a higher gear inevitably.
“The U.S. is not energy independent and may never be given the needs of an expanding economy,” said Kuehl. “When the recession still gripped the country, oil consumption was down. But, as the economy recovers, the gap between energy the U.S. can produce and what it needs will widen.” In short, he estimated the United States is very unlikely to approach anything that even resembles true energy independence any time in the near future.
-Brian Shappell, CBA, NACM staff writer