Shale energy boosters like to highlight the fact that it will make us more energy independent. Thanks to fracking, they say, the United States won’t need to rely on foreign sources of oil for much longer.It’s a nice-sounding story, but unfortunately it’s also a myth. Even if the United States produced all of the oil and gas it consumed, the price we would pay for oil would still be vulnerable to shocks from supply disruptions abroad. Barring some sort of move to oil isolationism (which, even if it were possible, would be very troubling to our allies), or a complete transition away from oil as an energy source, this is a reality we have to live with. But while true energy independence is sheer fantasy, there are plenty of benefits to having a burgeoning supply. Consider the following chart:
Notice how, compared to the five-year range, the price of oil last year was relatively stable. Despite a number of disruptions to important oil supplies in Nigeria and Libya, and worries that the situation in Syria would continue to expand beyond its borders, the per-barrel price of oil was on a more or less even keel. This is largely because of America’s growing oil wealth, which had the effect of stabilizing the market. With Mexico’s oil reforms paving the way for a hydrocarbon renaissance to our south, North America is becoming a major player in the international oil market, and that is softening the edges of price spikes.The chart below illustrates the growth and contraction in oil supply capacities around the world last year:
OPEC struggled, but the American shale boom helped offset those problems. As a result, the impact of OPEC supply contraction on the price of oil was muted. Not only is that a boon to the global economy, it gives the United States more foreign policy options. That flexibility is one of fracking’s greatest gifts. We’ll probably never be truly energy independent, but we’re certainly enjoying a great deal more energy security than in years past.