Shale Narrows the Trade Deficit and Bolsters Energy Security
The U.S. Energy Information Administration’s (EIA) recently released several key findings on U.S. shale that illustrate how development is transforming American energy production and reducing the trade deficit. Three main points from EIA’s report:
- The drop in net imports of oil (crude and petroleum products combined) was the major contributor to the United States reaching its lowest net trade deficit in November 2013 since 2009.
- Since early 2011, domestic crude oil production has risen sharply, resulting in a decline in imports.
- Starting in 2011, the United States has been a net exporter of petroleum products.
Industry ingenuity has unlocked enormous supplies of oil and natural gas from shale deposits all across the country. These abundant, domestic natural resources are largely to credit for the United States’ positive energy outlook, a situation that seemed impossible just a few years ago.
Supplementing the EIA findings, USA TODAY reports that, in the last year, “exports, mostly of refined gasoline and diesel, rose about 11%, narrowing the country’s petroleum deficit by about $59 billion, or 20 percent, to $233 billion.” The article, which utilizes figures from the U.S. Census, found that, “the shrinking petroleum gap was almost entirely responsible for a $63 billion decline in the nation’s overall trade deficit last year to $471.5 billion, the lowest since 2009.” Furthermore, the U.S. Census concluded that in the past year oil imports declined to the lowest levels since 1995. It’s no surprise that these trends run parallel to surging shale production.
How does this all translate? Less dependence on foreign nations for our vital energy needs.
Citigroup analyst Eric Lee describes the U.S. position as being at “the beginning of a long upswing.” A long upswing indeed, as the EIA finds that the United States has just over 26 billion barrels of proven oil reserves. This means that the United States will be able to maintain the benefits of an energy secure nation for years to come.
Also, for the first time in decades, the United States is able to exert a degree of control over global oil prices, as the enormous increase in domestic oil production has created a stabilizing effect on world energy costs. As the Center for New American Security explains, “internationally, new U.S. oil supplies have helped to cap the price spikes caused by severe global supply disruptions and to moderate oil prices for consumers.”
The International Energy Agency (IEA) reinforced this theme, calling U.S. oil production from shale a “game changer,” adding that: “U.S. shale oil will help meet most of the world’s new oil needs in the next five years, even if demand rises from a pick-up in the global economy.”
On top of being a major contributor to our nation’s robust energy portfolio, shale development is aiding the United States in maintaining its interests abroad by creating a more stable global energy market. Thanks to shale, the United States is primed to hold this strong position of an abundant supply of natural resources – leading to a reduction in the U.S. trade deficit – for the long-term.