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Alex Kimani

Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

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What “Energy Independence” Really Means For The U.S.

  • Since the oil crisis of the 1970s, America has relentlessly pursued the utopia of energy independence.
  • Now, nearly 50 years later, it seems America has finally accomplished that dream.
  • Energy independence is a little bit more complicated than it seems, however, and true independence may require a lot more renewable energy

Since the days of President Jimmy Carter and the 1970s oil crisis, the United States has relentlessly pursued the utopia of energy independence. Indeed, energy independence is a worthy pursuit that both Democrats and Republicans readily agree upon. After all, relying on other countries for oil, natural gas or coal is an inherently risky proposition since It can lead to wars, or compromise the country’s relationships with foreign powers.

The notion that the country could become self-sufficient by producing enough energy to sustain the entirety of its population and industries was first floated by Nixon when he declared war on foreign oil during the oil crisis of the 1970s. 

It was later popularized by Bush in a state of the union address in February 2006 when he decried United States’ addiction to oil, which is often imported from unstable parts of the world before announcing plans to break this addiction by developing several alternatives, including a multibillion-dollar subsidized ramp-up of biofuels. 

Bush went on to boldly declare that by 2025, America would “...make our dependence on Middle Eastern oil a thing of the past” by cutting imports from Gulf states by three-quarters.

Well, it turns out the former president was prescient on some key predictions, which in hindsight appears quite remarkable when you consider that back then, the shale industry was barely on its feet.

The revelation that the U.S. is currently producing more energy than it consumes suggests that America has finally achieved the seemingly elusive goal of producing enough fuels to avoid relying on the rest of the world.

Net Energy Exporter

According to the U.S. Energy Information Administration (EIA), the United States was a net energy exporter in 2019 and 2020.

EIA notes that total U.S. annual primary energy net imports (imports minus exports) generally increased in most years since the mid-1950s, reaching a record high in 2005, equal to about 30% of total U.S. energy consumption. Since 2005, total annual energy imports have gradually decreased while total energy exports have increased. 

The United States became a net total energy exporter in 2019 for the first time since 1952, and maintained that position in 2020 even though both total energy production and consumption were lower in 2020 than in 2019. Total U.S. energy exports exceeded total energy imports by 3.46 quadrillion British thermal units (quads) in 2020, the largest margin on record. U.S. energy exports in 2020 totaled 23.47 quads, and energy imports fell 13% to 20.0 quads, the lowest level since 1992.

Crude oil accounts for the largest share of U.S. energy imports on an energy content basis. Even though the United States remained a net importer of crude oil in 2020, crude oil net imports were at the lowest level since 1985. Moreover, some of the imported crude oil is refined into products that are exported.

us_net_imports

Source: EIA

Despite a 4% drop in domestic crude oil production in 2020 from 2019, U.S. crude oil net imports in 2020 were the lowest since 1985. U.S. total annual crude oil exports have increased every year since 2010 and reached a record high in 2020 of about 3.18 million barrels per day (b/d). U.S. crude oil imports fell to about 5.88 million b/d in 2020.

U.S. petroleum products (excluding crude oil) imports and exports declined in 2020 from 2019: imports by 15% and exports by 5%. However, total annual petroleum products exports in 2020 were the third highest on record behind 2019 and 2018. Propane was the most-exported petroleum product in 2020, followed by distillate fuel oil.

Gross exports of natural gas have increased every year since 2014, and in 2017, the United States became a net exporter of natural gas for the first time since the late 1950s. In 2020, natural gas gross exports reached a record high of 14.43 billion cubic feet per day (Bcf/d), and gross imports of natural gas fell to 6.99 Bcf/d, the lowest level since 1993. Increases in domestic natural gas production and increases in liquefied natural gas (LNG) export capacity have contributed to growth in natural gas exports.

Trade volumes of coal and other fuels account for relatively small shares of U.S. total energy trade. U.S. coal exports, which had increased in both 2017 and 2018, decreased in both 2019 and 2020. The United States has been a net coal exporter since at least 1949.

Net Petroleum Exporter

In 2019, for the first ever, the U.S. became a net exporter of petroleum--which includes crude oil and petroleum products. 

Unfortunately, U.S. crude imports have remained stubbornly high even during the shale boom thanks to healthy domestic demand. U.S. crude oil production has shot up 160% to over 13 million b/d since the advent of the shale era; meanwhile, domestic demand has remained flat but very high at 19-21 million b/d. 

In 2019, the country still imported 9.1 million b/d of petroleum and other liquids, with 6.8 million b/d of those being crude oil, due to constraints such as regional supply/demand imbalances, infrastructural challenges, and other factors. Further, many of the refineries in the United States are optimized to process the heavier crude grades from Canada, Venezuela, and Mexico instead of the lighter, sweeter oil crude from its own shale fields. 

petro_exporter

Source: EIA

The big consolation here is that a bigger proportion of its oil imports have been coming from its northern ally, with crude imports from Canada clocking in at 134 million barrels in 2019 from 76 million in 2008. 

As Bush predicted, the United States is no longer as heavily reliant on OPEC for its oil, with the organization supplying less than 30% of imports.

Renewables Offer The Best Solution

It’s, therefore, clear that whereas the overall trend is that the U.S. has been exporting more energy than it imports, it’s still a very mixed bag with many regions still importing vast quantities of crude and other petroleum products. 

To complicate matters further, the planet’s fossil fuel reserves are finite, with experts estimating that the U.S. only has enough natural gas reserves to last 93 more years, and enough coal to last about 283 years.

In other words, the United States will never achieve true energy independence while still relying so heavily on fossil fuels.

Indeed, some experts now contend that the only one surefire way to be completely and indefinitely energy independent is by adopting 100% renewable energy.

At first, this sounds like a pipe-dream, considering that only tiny Costa Rica has come close to achieving that goal after it generated 98.1% of its electricity from renewables in 2016. The Central American nation, however, has a population of 5 million vs. 330 million by the U.S. and a land area 0.5% the size of the U.S.

But some experts still insist that 100% renewable energy in the U.S. is not only feasible but can lower costs.

Renewable resources generate only around 19 percent of U.S. electricity in 2020. However, last year, a group of researchers at Stanford University set out to prove that a 100% renewable energy grid by 2050 is not only feasible but can be done without any blackouts and at a lower cost than the existing grid.

The researchers matched time-dependent energy supply with demand and storage in a grid integration model for every 30 second interval in 2050 and 2051. The study authors analyzed U.S. regions and countrywide demand until the model produced a solution with what the authors called zero-load loss--meaning, essentially, no blackouts with 100% renewable energy and storage. 

Wesley Cole, a senior energy analyst at the National Renewable Energy Laboratory (NREL), says that hourly interval models are more common, but this new study gives researchers like himself a boost of confidence that they are not missing anything by modeling at a higher temporal resolution.

“The question is much more an economic question, not so much a technical question,” says Cole. According to Cole, the pathway to a 100% renewable grid is not as expensive as first estimated due to huge cost reductions in solar and wind energy over the years.

Unfortunately, politics always seem to get in the way.

By Alex Kimani for Oilprice.com

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Leave a comment
  • Carlos Everett on February 21 2022 said:
    If Hurricane Harvey taught us anything, it taught us that 100 year or 500 year floods science was no longer applicable. This year, Europe learned a very painful lesson, that has bankrupt many companies and they learned that sometimes the wind does not blow or the sun does not shine according to mankind's desire.

    I personally have tried 3 times over a 25 year period to invest in Solar, yet even today the economics did not work. In reading not only Oilprice, but other sources such as Wall Street readers in various states say, they cannot make the solar economics work.

    However, we keep hearing from authors such as yourself that renewables are cheaper, yet, that is all that is said, with no backup economics or a phone number we can call to sign up for this cheap energy.

    Researchers at Stanford have also predicted that San Francisco would recover from the 1906 earthquake in one year, however, this did not take into account that half of the Stanford students who were asked to find the bodies of SF, yet, my great uncle, who was a Stanford student at the time, said the devastation was beyond anyone who assisted ever forgetting the Earthquakes damage on both the health and mental health of students.

    My point, is trying to predict that renewables will replace other fuel sources, is based on a study that has parameters that do not even exist today, so their study is flawed before it even begins. Houston , Texas would have never predicted that 30 years ago that one area of the city would get 30+ inches of rainfall in a 24 hour timeframe. Houston also built a major expressway that was completed in 2015 and they never expected it to ever flood , yet in 2017 , the new freeway was flooded and my rental car was totaled. Studies always have a flaw when they say they accounted for every possibility, yet no one can predict 30 years in advance.

    I get so sick of authors listening to this research project, yet no one ever publishes the economics, it is as if the Researchers are GOD at Stanford, and yet people who have worked in the energy world for 40+ years are ignored. Renewables are going to provide energy independence just like fossil fuels has done, yet people in the industry kept working to improve technology and no one 30 years ago would have predicted energy independence, so relying on a 2022 study, that by the way would have to produce twice the amount of kilowatt that nat gas yields, just because nat gas is that much more efficient.

    Do you realize to produce twice amount of kilowatts to yield the same as nat gas, that the cost and the impact on the poor is going to be horrendous. Next time, put your mouth where your words are and publish the economics that Stanford predicts--by the way how many forest fires did Stanford take into account as if they can actually predict forest fires. For that matter, the next earthquake may cause California to drop into the ocean. Publish these so called economics so the world can see, instead of just garbage that renewable are cheaper, yet no proof.
  • Mamdouh Salameh on February 21 2022 said:
    Energy independence for the United States is an illusion. While the shale revolution has transformed the United States from a natural gas importing country into an exporting one, this can’t be said of crude oil.

    The current US production and exports of natural gas can’t compensate for rising crude oil imports as a result of a stagnant shale oil production and rising consumption. Therefore, the United States will remain a net energy importer with energy independence being illusory.

    Even with a contribution of renewables, the United States will never ever achieve energy independence first because any growth in renewables will come at the expense of fossil fuels and second because renewables on their own are incapable of satisfying the US energy needs.

    In 2021 the United States consumed on average an estimated 20 million barrels a day (mbd) and produced on average 11.0 mbd thus needing to import 9.0 mbd.

    Even its exports of an estimated 3.0 mbd of the extra light crude were in exchange for medium and heavy crudes which American refineries are tooled to process and therefore aren’t net exports.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Robert Myers on February 23 2022 said:
    Open the Keystone pipeline morons!
  • Lee James on February 23 2022 said:
    I generally agree with the conclusion expressed in the article that it is best to achieve energy independence using renewable energy. I would like to see an article do a cost and raw materials-availability analysis to check on how well such an effort can scale up in a big way.

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