In November, the International Energy Agency (IEA) recognized the remarkably positive developments in the U.S. energy sector of the past few years. Not only did the IEA project that U.S. oil production would exceed that of Saudi Arabia by 2020, it also projected that the United States would become virtually energy independent by 2035. However, what the IEA did not do was emphasize how much of this good news has occurred as the result of market forces rather than government planning aimed at securing energy independence.
The IEA is now projecting that U.S. oil production will increase markedly to over 11 million barrels a day by 2020. That should allow U.S. oil imports to decline to 4 million barrels a day from their present level of around 10 million barrels a day. The IEA is also forecasting that the United States will become a major natural gas exporter over the next few years.
Whether or not the IEA’s bold projections materialize, there can be little doubt that major change is underway in the U.S. energy sector. At the start of the Obama administration in January 2009, the expectation was that U.S. oil production would continue its decline of the past two decades and that oil imports would continue to increase. Instead, there has been a veritable boom in U.S. oil and gas production that has already significantly reduced U.S. energy import dependence.
Since 2008, U.S. oil production has increased by around 25 percent. This has facilitated a reduction in oil imports as a share of U.S. oil consumption from 60 percent in 2005 to around 42 percent at present. More dramatically yet, the United States has now overtaken Russia as the world’s largest natural gas producer, as a result of a boom in shale gas production. In less than a decade, shale gas production has increased from 2 percent of U.S. natural gas production to around 37 percent at present.
Energy independence has been a foreign policy goal of successive U.S. administrations since President Nixon set that goal in 1973 in response to a major Middle Eastern oil supply disruption that followed the Yom Kippur War. However, over the past four years, the turnaround in the U.S. energy sector toward virtual energy independence has been driven by market-related phenomena rather than by the implementation of a national energy plan.
Read More at american.com . By Desmond Lachman.