Energy Independence Is a Farce

It's a nice-sounding goal but it makes little sense in a global economy.


Much has been made of the need for the U.S. to wean itself off foreign sources of energy but what would energy independence actually do for the United States? In a lengthy Wall Street Journal article this week, the newspaper hyped the declining U.S. reliance on Middle East oil.

By 2020, nearly half of the crude oil America consumes will be produced at home, while 82% will come from this side of the Atlantic, according to the U.S. Energy Information Administration. By 2035, oil shipments from the Middle East to North America "could almost be nonexistent," the Organization of Petroleum Exporting Countries recently predicted, partly because more efficient car engines and a growing supply of renewable fuel will help curb demand.

The article suggested dramatic ramifications for U.S. diplomacy as the change "achieves a long-sought goal of U.S. policy-making: to draw more oil from nearby, stable sources and less from a volatile region half a world away." However, while depending less on unsavory regimes like Saudi Arabia is a satisfying concept, it doesn't dissolve America's fealty to global crude prices. (Theoretically, even if all of U.S. oil came from North America, disruptions in Iraq or Iran would still ramp up global prices and damage the U.S. economy.) That means U.S. energy security is still very tied to the Middle East regardless of where the U.S. is getting its oil--an undesirable reality that will keep the U.S. militarily invested in the Middle East for decades to come. But besides the limitations on foreign policy, there's also the question of whether energy independence is a worthwhile goal in the first place -- a query expanded on during a panel discussion at the Aspen Ideas Festival in Colorado Saturday.

"We're not moving towards a world of energy independence, nor should we," said Peter Orszag, President Obama's former budget director and vice chairman of global banking at Citigroup. "It doesn't make any sense."

Orszag admitted that the fact that the U.S. became a net exporter of refined crude oil for the first time in 60 years in December was "shocking" but emphasized that rather than energy independence, the U.S. should be focusing on a "diversification of sources" (i.e. natural gas and renewables) so the economy can withstand shocks in energy prices. If the U.S. were to reduce its sources of energy based on where it comes from, he argued, it would make the U.S. economy less secure. At the panel, attendees such as Mitch Landrieu, the Democratic mayor of New Orleans and a major booster of natural gas, nodded vigorously. Given the vested interests in alternative energies, it won't be surprising if the national mantra of "energy independence" morphs into something along the lines of "energy security," which endorses an everything-but-the-kitchen-sink approach.