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Page added on December 30, 2018

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US energy independence is not the shining prize it seems

Consumption

It is a common sensation at this time of year: waiting for something in eager anticipation, only to find it disappointing when it eventually arrives. For decades, the US has dreamt about ending its dependence on foreign oil. Now “energy independence”, defined in that way, is very close, the limitations of that ambition have been brought more sharply into focus.

Just before Christmas, the American aircraft carrier, the USS John C. Stennis, sailed into the Gulf — a show of force in a region that provides more than a fifth of the world’s oil. It was a reminder that the country still takes a keen interest in keeping global oil supplies flowing.

An initiative launched this month by some US states to generate revenue from transport fuels to invest in infrastructure has offered a different perspective, potentially offering solutions to some of the flaws in successive administrations’ approaches to energy security.

This has been a been a momentous year for the US oil industry. Crude production soared, rising by about 1.6m barrels a day in the year to December, as shale companies revved back up again after the go-slow forced on them by the low prices of 2014-16. The US has become the world’s largest oil producer, with output well above its previous peak in 1970 and still rising.

The country remains a large importer of crude, but in December it reported exports of crude and petroleum products that for a single week were higher than its imports. On a more sustained basis, next year’s net imports are expected to be at their lowest levels since the 1950s.

The flood of US oil coming on to world markets has helped drive prices to their lowest levels for more than a year, and forced Saudi Arabia and its allies to cut production in response.

Yet despite these dramatic changes, the preoccupations of US energy policy still seem remarkably familiar. When President Donald Trump moved to put pressure on Iran by reinstating sanctions, their impact was blunted by waivers granted to some of its largest customers because of fears about the potential effect on oil prices.

As Saudi Arabia and other members of Opec, the oil producers’ cartel, have debated how much to produce, Mr Trump has entreated them to keep pumping with a mix of flattery and threats.

His comments about the importance of Saudi oil following the death of Jamal Khashoggi did not look much like a display of US independence, let alone the “energy dominance” that he talked about last year.

Some things have changed. The US oil renaissance has helped encourage those in Congress who are more willing than Mr Trump to take an assertive line with Saudi Arabia. The Senate this month backed with a 56-41 vote a resolution to withdraw US forces from unauthorised support for the Saudi military in Yemen.

A “Nopec” bill, which would make it a criminal offence for countries to work together to affect the oil price, has made progress in the House, and would threaten Saudi assets in the US if it became law.

Still, US policymakers have good reason to be wary of a future oil shock. For the US economy as a whole, the impact on consumers of a rise in prices would be offset by the stimulus to investment in the oil industry. But that would be little consolation to the drivers who would find their household finances under pressure.

For as long as Americans depend on oil-based fuels for transport, they will remain exposed to price shocks. In fact, their vulnerability has been growing: US consumption of liquid fuels has been rising steadily since 2012, and by next year it may be back to its 2005 peak at 20.8m b/d. The shift in the vehicle market away from cars and towards SUVs is a sign that lower fuel prices are helping to lock in higher demand.

One answer to that could be a proposal launched this month by nine states in the north and east of the US, from Vermont to Virginia. The plan is intended to help address the threat of global warming, in defiance of Mr Trump’s plan to withdraw from the Paris climate agreement and in alignment with the nearly 200 countries that decided in Katowice, Poland, this month to press on with efforts to cut greenhouse gas emissions.

The states’ plan is to set their own cap and a price on carbon emissions from transport fuels to generate proceeds that would be invested in infrastructure such as rail, electric vehicles and housing developments oriented around public transport.

The plan is intended to curb greenhouse gas emissions. But to the extent that it cuts demand for petrol, it will also strengthen energy security.

Change will not be easy or quick. Oil consumption is bound up with fundamental decisions about where people live and work. But finding popular ways to reshape mobility in a way that curbs oil use would be the most effective energy security policy of all. Today, the search for energy independence is framed almost entirely as a question of oil supply. The drawbacks of that approach suggest it is time to start thinking about the problem of demand.

The News PK



10 Comments on "US energy independence is not the shining prize it seems"

  1. makati1 on Sun, 30th Dec 2018 6:45 pm 

    Yellow Vests anyone? LOL

  2. Mick on Sun, 30th Dec 2018 7:17 pm 

    Not sure the yellow vest movement would work to well in the us mak .too many trigger happy cops looking for an excuse for target practice

  3. Anonymouse on Sun, 30th Dec 2018 8:08 pm 

    Paki News huh? if the above is any indication, they are as reliable as ‘source’ as CNN, fuax, or MSNBS.

  4. Outcast_Searcher on Sun, 30th Dec 2018 11:10 pm 

    So let’s pretend the imperfect is the enemy of the good. Sure.

  5. makati1 on Sun, 30th Dec 2018 11:37 pm 

    Mick, but it would start the civil war. That is what is needed to set things right.

  6. Darrell Cloud on Mon, 31st Dec 2018 2:15 pm 

    Edmund Ruffin is a good case study for those pushing for civil war. A civil war would take down the grid and we would lose 90% of our population.

  7. Go Speed Racer on Tue, 1st Jan 2019 12:34 am 

    Happy New Year Anonymouse, Mick, Outcast,
    Darrell and Makita,

    Firecrackers, beer, and a tire-fire,
    over at my backyard, come on over!

    And right at midnight, we’re blowing up
    a plastic outhouse!

    Best Wishes for 2019 !

  8. Anonymouse on Tue, 1st Jan 2019 12:53 am 

    Thanks GSR, we about to light the traditional New Years Eve Sofa here in about one hour, to start the new year in the the 21st century way.

    With billowing clouds of toxic smoke, and VOC out-gassing. Fun for the whole family.

  9. Mick on Tue, 1st Jan 2019 4:32 am 

    OK gsr will be over with a couple of recliners that have been soaking in sump oil for a few days that’s gonna burn some nasty black smoke the way that you like

  10. Davy on Tue, 1st Jan 2019 4:43 am 

    GSR, I burn native grass fields that produce smoke columns you can see from the next county. Try to top that with a stupid sofa. LOL. Nature makes the biggest shows.

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