The U.S. looks set to increase its petroleum product exports while reducing its net crude imports in the coming years. That’s according to Energy Information Administration, which recently released an Annual Energy Outlook:
Together, lower crude oil imports and higher product exports reduce net imports of petroleum and other liquids, which in 2013 provided 33% of total U.S. consumption (product supplied). In the AEO2015 Reference case, this percentage falls to 14% in 2020, when domestic crude oil production reaches 10.6 million barrels per day. Domestic crude oil production then begins to decline, and the net import share of product supplied increases to 17% by 2040.
It’s no secret what’s behind these trends, either. Hydraulic fracturing and horizontal well drilling have unlocked massive new reserves of oil and gas, and in so doing have remade the American energy landscape. Moreover, our energy trade balance is a huge part of our energy security. The less we import, the less we rely on sources of supply beyond our control. That gives us more policy options even as it strengthens our global economic standing—all good things by any measure.
But while fracking deserves credit for its contributions to America’s trade balance, it’s worth remembering that that energy security isn’t energy independence. The former is achievable, while the latter just isn’t in the cards in today’s global crude market. Even with the rosiest projections we’ll still be importing millions of barrels of crude per day for the foreseeable future. And if by some other technological breakthrough we were able to produce enough crude to preclude the need for imports, we would still be subject to the vagaries of the international market. Producers can ship barrels worldwide, and will look for the best price they can find.
This flood of American oil is helping iron out supply shocks by giving the market a stable new source, and that’s a boon to both U.S. and global energy security. It isn’t, however, fully insulating us from events affecting the oil market.