The United States and Canada are awash in new oil and gas resources. That doesn't mean we're about to break our foreign-energy habit.
American energy independence makes for great political rhetoric. And not much else.
We can thank President Nixon for the term. During the dark days of the 1973 Arab oil embargo, he publicly vowed to wean the United States off foreign energy sources by the end of the decade, an initiative he dubbed "Project Independence." While things didn't quite pan out the way he imagined, the dream he conjured has lived on with presidents from both parties ever since.
These days, though, it's not just politicians who are dreaming. Over the last year, it's become respectable -- even chic, in a geeky, Washington think-tank sort of way -- to suggest that the United States might indeed be close to kicking its foreign energy habit. Take this Bloomberg headline from Monday: "America Gaining Energy Independence." Or this Financial Times article from October: "Pendulum Swings On American Oil Independence." Daniel Yergin, the renowned oil analyst and Pulitzer Prize winner, now argues that the center of world oil production may be moving from the Middle East to the Western hemisphere.
There are plenty of good reasons for the optimism. With the development of its massive shale deposits, the United States has become the world's single largest producer of natural gas. We're so awash in it that domestic prices have plummeted to historic lows. Advances in drilling technology have also made it possible to access hard-to-tap "tight" oil reserves in states such as North Dakota. Analysts believe those fresh crude sources could yield 2.9 million barrels of oil a day by 2020, up from 900,000 today. Meanwhile, cars are getting more efficient, and fuel use has dropped after soaring during the last decade, which frees up more energy production for export. According to Bloomberg, the U.S. is already getting 81% of its energy from domestic sources, the largest share since 1992, and up 10 percentage points since 2005.
Then, there's Canada, which now claims the world's third largest oil reserves thanks to Alberta's petroleum rich tar sands. That's important because Canada and the U.S. are family when it comes to global trade. They're currently our single largest oil supplier. We sell them 75% of their imports and buy 75% of their exports. The National Petroleum Council, which advises the White House on energy issues, believes that by 2035, the two countries combined could more than double their oil production to 22.5 million barrels a day, enough to satisfy their current total consumption.
If you're not too concerned about how much carbon gets pumped into the atmosphere over the next few decades, these are all great developments. (If you do care about global warming, these are all reasons to have a stiff drink, and perhaps consider moving far from the coasts). But even if we're approaching energy independence, the chances of ever actually getting there are rather slim, especially if our economy is still running on oil in 20 years.