America Has Record High Energy Security, Thanks to Shale Revolution
Energy security risk in the United States has reached its lowest point since 1995, according to the Global Energy Institute’s (GEI) 10th annual Index of U.S. Energy Security Risk. This represents a remarkable shift from GEI’s first report in 2010, where they found a deterioration of U.S. energy security and predicted “a heavy toll in geopolitical, economic, and human terms.”
Since that time, America has exceeded every expectation, catapulting energy production and exports, and “making us the world’s single largest energy producing county.”
As the report explained:
“At its inception in 2010, the Index showed a dire energy security situation in the United States…Little did any of us realize at the time how the gathering Shale Gale would blow away this forecast and produce a period of dramatically lower energy security risks.”
Just look at what a difference a decade can make:
As the above graphic shows, total energy security risk fell 1.6 points in 2018 to 75.8 points, representing the fourth lowest score since 1970. Using the Energy Information Administration’s 2019 Annual Energy Outlook, GEI predicts that U.S. energy security risk will average 73.4 points through 2040 – lower than any year since 1970.
The report examined 37 different metrics of energy security risk in nine categories: Global Fuels; Fuel Imports; Energy Expenditure; Price and Market Volatility; Energy Use Intensity; Electric Power Sector; Transportation Sector; Environmental; and Research & Development.
Booming Energy Production Fuels Energy Security
GEI credits the shale revolution with helping to improve American energy security over the last decade:
“In just the seven years since 2011, the U.S. energy security risk score plunged 24 points from its record almost entirely because of the direct or indirect benefits of the U.S. shale revolution. In other words, the magnitude of the shale revolution on U.S. energy security (to the good) has been as big, if not bigger than the combined impact of tumultuous geopolitical events that shook world energy markets profoundly in the 1970s.”
According to the report, dry natural gas production grew 43 percent from 2010 to 2018, while crude oil production more than doubled to nearly 11 million barrels per day (MMbbl/d) from 5.5 MMbbl/d because of continued oil and natural gas development in places like the Permian Basin.
By producing more at home, the United States is able to increase national security – reducing its dependence on foreign energy, decreasing its vulnerability to supply chance disruptions, and exporting American oil and natural gas to our allies abroad. In fact, increased U.S. production has helped the country to become the world’s leader in oil exports, LNG exports, and EIA predicts it will become a net exporter of total petroleum products (crude oil and refined) by 2020 on an ongoing basis. As a result, U.S. petroleum import risk has fallen 38 percent to its lowest score going back to 1970.
These impressive stats stand in stark contrast to EIA’s 2017 Energy Outlook. A mere two years ago, the EIA projected that the United States wouldn’t achieve net export status until 2050. Thanks to impressive progress by industry over the last two years, the agency adjusted its forecast by nearly 5 MMbbl/d!
Kenneth Medlock, Senior Director of the Center for Energy Studies at Rice University’s James A. Baker Institute for Public Policy explained the implications of these changes for our national security:
“As the US increases its exports of crude oil, petroleum products and natural gas, its influence explants into those nations that increasingly rely on imports to satisfy their energy appetites associated with economic growth. In general, expanded US production renders global supply to be more responsive, and, as a result, carries an energy security benefit to consumers at home and abroad.”
Looking ahead through 2040
GEI predicts that energy efficiency, fuel imports, and environmental risk will decrease through 2040.
Thanks to increased production and decreasing reliance on foreign energy, GEI expects that fuel import risk will reach a score of zero for every single metric by the end of next year. This is an outstanding shift from the United States’ reliance on foreign energy a mere ten years ago.
In addition, GEO expects to “see large improvements (typically 20 percent to 40 percent)” on efficiency-related metrics. Thanks to innovation across all sectors of the economy, energy efficiency will continue to improve, decreasing pressure on demand, prices, and imports. Risk will also decline between 30 to 40 percent with all three environmental metrics measuring aspects of carbon dioxide. GEI expects to see the largest improvement in the amount of emissions per dollar of GDP, reflecting improved efficiency and decarbonization.
GEI’s new report reaffirms the benefits America’s oil and natural gas industry are continuing to have for our national security. Every year, the United States becomes better prepared to meet our own energy demand and to help our partners around the globe. The industry has transformed U.S. energy security over the past decade and will dominate world energy markets through 2030.
As Secretary Mike Pompeo explained at this year’s CERA conference:
“We now have the capacity to take our technology, our products, our pipelines, deliver them around the world, provide safe, affordable energy, diversify energy resources for each of these countries. They’ll be safer, the American people will be safer as well.”