America is about to reach a new energy milestone: According to recent government forecasts, oil imports will will drop to the lowest level in more than 25 years in 2014. The FT reports that imports will fall to six million barrels per day, half of the 12 million barrels per day we imported from 2004–07, putting America well on the road to energy independence.
Our increasing energy independence has a lot to do with the new drilling technologies changing the domestic oil production landscape. Because of new extraction techniques like fracking and horizontal drilling, the International Energy Agency now believes that the U.S. will become the world’s largest oil producer by the end of the decade, perhaps even cutting net imports down to zero.
The drop in oil imports is good news even for those greens who still think, against the evidence, that fracking poses unacceptable environmental risks. Increased U.S. production isn’t the only thing taking a bite out of oil imports; decreased consumption has also played a role. Consumption has gone from 20.7 million barrels per day in 2007 to 18.7 million in 2012.
The news isn’t all good. As Michael Levi points out over at the CFR, because oil prices are high, even with reduced imports by volume we are still spending a big chunk of change on them. And it isn’t a miracle cure for everything that ails us.
Still, energy independence won’t free America to disregard the role of the Middle East in the world economy, but it will give us much more flexibility in dealing with the difficult problems this region presents. The tax revenues from greater oil and gas production at home, plus the beneficial results of the hundreds of thousands of new energy jobs that stand to be created will materially help our long term budget picture.
The good news about energy continues to roll in.