America's New Energy Era

The United States is on the path to energy independence. Its new, dynamic role calls for a new international energy policy.

Lewis McCrary/TNIThe past year may have been one for political gridlock and economic stagnation, but the energy world saw some of the most important achievements of the past few decades. Some observers have even suggested the United States is on the cusp of realizing the coveted dream of “energy independence,” a major goal of political leaders from Richard Nixon, who created the forerunner to the Department of Energy, to Texas governor Rick Perry, who has suggested he wants to abolish it.

The fact is, the United States is less dependent on foreign energy imports than we were only a couple of years ago. This is primarily due to what’s known as the North American Unconventional Gas Revolution. The development of “fracking” technology has allowed American and Canadian companies to extract more than one hundred years’ worth of previously inaccessible natural gas here at home. Despite environmental concerns stirred by the extraction methods, fracking caused major plans for importing liquefied natural gas to be quickly curtailed and the United States to start exporting the fuel that experts from ExxonMobil as well as the International Energy Agency have suggested will shape the world’s energy future.

On top of that, for the first time since 1949 the United States exported more petroleum products than it imported. These are, of course, refined products: gasoline, jet fuel, lubricants and kerosene, not crude oil as some reports suggested. But the U.S. crude benchmark, West Texas Intermediate (WTI), did fetch better prices almost all year than did Brent, the crude benchmark for much of the rest of the world. At one point, Brent was $25 more expensive than WTI. So, while oil is of course fungible because it is traded on a world market, the infrastructure realities of who gets what molecules through which pipelines meant that those savings were passed on to American businesses and consumers.

And then there’s the simple point that U.S. oil and natural gas production continued to rise rapidly in 2011. Some Republican presidential candidates have advocated increased offshore drilling in American waters and the opening of the Arctic National Wildlife Refuge in Alaska to resource exploitation. But due to advances in technology, onshore fields that are not in protected areas are yielding more oil and gas than ever before.

Should the Keystone XL pipeline deal be approved by Congress, the closer energy partnership between the United States and Canada will vastly improve our energy security in the face of unrest in the broader Middle East and a voracious Chinese economy sucking up resources from across the globe. While the United States certainly has not achieved energy independence, U.S. energy security is better than it has been for at least four decades, even compared to the era of low oil prices in the 1990s.

Why, then, did the State Department create a new bureau for energy diplomacy? The mission of the Bureau of Energy Resources (ENR) is to “ensure that all our diplomatic relationships advance our interests in having access to secure, reliable, and ever-cleaner sources of energy.” A laudable goal, perhaps, but in an era of budget austerity and surging domestic production, is it necessary?

The simple answer is yes. The United States is in transition from the world’s greatest energy consumer to a more dynamic role as a global energy player: importing, exporting and serving as laboratory for new extraction technologies. Thus, we will need a more nimble international energy policy. Our interests have expanded far beyond just maintaining low oil prices.

Russia has replaced Saudi Arabia as the world’s pivotal producer. China has replaced the United States as the most consequential consumer. And "green" technologies are in a highly competitive footrace with fossil-fuel exploitation. The energy world is increasingly fluid.

The United States needs energy diplomats to best take advantage of its improved position and leverage its increased energy security. Energy independence may be a long way off, but in the meantime the country must embrace the new energy era.