America's New Era of Home-Grown Energy

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Ask the average person on the street if most of the oil used in the U.S. is domestic or imported, and the answer will most likely be "imported." Ask where most of the imported oil comes from, and the answer will most likely be "from the Middle East."

Both of these answers would be wrong — and moving forward, they will be increasingly wrong.1

It is true that by 2005, when the U.S. reached a peak in petroleum imports, those imports represented a majority of our usage, but even at the peak, the share was 60 percent, not as high as most people believe — and, it has since dropped to 46 percent.

Of these imports, many would be further surprised to learn that only 16 percent comes from the Persian Gulf. The largest foreign supplier, at 25 percent and growing, is Canada. Consequently, North America is quickly moving toward energy independence.

Two factors are causing this enormously important shift:

  • The first factor is a drop in the demand for petroleum. Part of this drop is unambiguously good news: We're using substantially less energy for every dollar of GDP we generate. As vehicle fuel economy continues to rise, this efficiency will continue to improve.
  • The second reason for the drop in demand is not such good news. The prolonged downturn in the economy has caused a sizable
    reduction in demand.

But more important than the decreasing demand is the rapidly accelerating rise in domestic production of energy. Petroleum production, for instance, has risen by 18 percent since 2008, despite government regulations that have impeded new oil production.

In fact, the increased production is not from oil that was recently discovered under the United States and its territorial waters. We've known for decades that it's been there. However, government restrictions have prevented their development.


These restrictions have been kept politically viable by confusing the definitions of certain terms. For instance, Senate majority leader Harry Reid and others have argued that "Since the U.S. has only 3 percent of the world's oil reserves but uses 25 percent of its oil production, it is pointless to develop these reserves." Instead, it is argued, "The available energy development dollars should go into renewable energy sources like wind and solar."

In this argument, politicians use terms with specific legal definitions to mislead the general public. The term "reserves" refers to a country's proven and economically available energy supplies. "Resources" refer to the much larger, untapped supply, which represents a country's potential energy...

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