American Energy Independence

During his 2012 presidential campaign, candidate Mitt Romney famously touted an energy plan that would make America energy independent. Like President Richard Nixon during the height of the 1973 Arab oil embargo, Romney pledged that he would make America an energy superpower while also dramatically reducing the dependence on the Organization of the Petroleum Exporting Countries (OPEC). He claimed that new technologies in the private sector would ignite an American energy revolution, resulting in an affordable supply of power-generating fossil fuels that would be produced by millions of newly created jobs (Plumer, 2012).

Political Rhetoric

Romney declared that his new energy policy would result in over three million new jobs, an economic recovery that would add more than $500 billion to the GDP, a reduction in the trade deficit, more than one trillion dollars in revenue for federal, state, and local governments, lower energy costs for middle-class families, and stronger national security because of reduced dependence on foreign energy. While Mitt Romney was never elected president, was his plan for energy independence too good to be true?

Foreign policy experts have said that creating energy independence by drilling endlessly for oil may amount to political rhetoric, and not much else (Weissmann, 2012). While Romney’s plan called for the immediate implementation of the Keystone XL pipeline, oil drilling along the coastlines of Virginia and the Carolinas, and boosting drilling operations and fracking on federal lands, this may not have created energy independence for the American economy.

Oil on the Global Market

Michael Levi, an energy expert at the Council on Foreign Relations, has stated that the concept of energy independence is “a pipe dream.”He says that, “because oil is easier and cheaper to transport than coal and natural gas, it’s sold on the global market – which means that what we pump out of the ground here doesn’t necessarily stay here” (Goodell, 2012). Experts agree that the only way to ensure that domestically produced oil will stay in America would be to nationalize the oil industry, which was not a component of Romney’s energy plan, or any candidate since Romney.

As a result of oil being traded on a global market, drilling our way to energy independence may not be a viable option to reduce dependence on foreign oil. Moreover, since oil is a global commodity, tensions in the Middle East could cause prices to spike for everyone, regardless of where their petroleum is produced. This scenario was recently realized when attacks on Saudi Arabia’s oil infrastructure caused global oil prices to spike.

American Oil Exports

As recently as 2006, the United States imported nearly 60% of its oil (Bordoff, 2019). Today, as a result of the Trump administration’s support for more oil production, the United States is on the road to becoming a net oil exporter. Even though President Trump has argued that America’s resurgence of fossil fuel production would act as a cushion to alleviate global oil price shocks, gas prices still dramatically increased following the sophisticated attacks on Saudi Arabia’s Abqaiq processing facility (Bordoff, 2019)

The U.S. Energy Information Administration has forecasted that the American oil production will reach nearly 6.7 million barrels a day by late 2020 (Weissmann, 2012). Even with this increase, America will still be subject to oil being sold on a global market. While the country will never be truly free from foreign oil, natural gas may offer opportunities for energy independence. As a result of natural gas being challenging to ship globally, it’s not sold on the global market. Therefore, as the domestic supply of natural gas continues to increase, prices may continue to decrease, irrespective of what happens in the Middle East.

Sources

Bordoff, J. (2019). “The Myth of U.S. Energy Independence Has Gone Up in Smoke.” Foreign Policy.

Goodell, J. (2012). “Mitt Romney’s Disastrous Energy Plan.” Rolling Stone.

Plumer, B. (2012). “Five things to know about Mitt Romney’s energy plan.” The Washington Post.

Weissmann, J (2012). “The Myth of Energy Independence: Why We Can’t Drill Our Way to Oil Autonomy.” The Atlantic.