THE FALSE PROMISE OF ENERGY INDEPENDENCE / THE NEW YORK TIMES OP EDITORIAL

December 21, 2012

The False Promise of Energy Independence

By MICHAEL A. LEVI

 

The International Energy Agency recently confirmed what market watchers have been saying for a year: oil and gas production in the United States is surging and is expected to continue to rise. This trend has led a parade of analysts and even the government’s National Intelligence Council to predict that, after four decades of failed attempts, America might soon become energy independent.




This view, if taken too far, is not only wrong, it is dangerous. The United States would remain entangled with the global oil market indefinitely even if it were to import no oil. Political leaders lulled into a false sense of security by rising domestic oil and gas output run the risk of making big mistakes.

 

 

 

      

There is no doubt that oil and gas production in the United States is growing strongly, bringing with it important economic and security benefits. Indeed, it is entirely plausible that within 10 years or so, North America could produce as much oil as it consumes. (Canada and Mexico are typically grouped with the United States in oil analyses because the three markets are tightly integrated.) The resulting freedom from any need to import oil from overseas is what has led some analysts to herald a coming age of energy independence.

 

 

      

But this misreads our vulnerabilities. Since oil prices are set on world markets, we would not be immune from volatility elsewhere — unless the United States decided to wall itself off, an extreme measure that could inflict severe pain on the nation’s allies. The United States economy is perpetually at risk because spikes in oil prices can quickly strip consumers of cash at the gas pump. This sudden “tax” can knock the economy on its back, regardless of where we buy oil.

 

 

      

Instability in the Middle East would still hit motorists in the Midwest, and the United States would still be called on to provide stability there or to intervene. And the United States would still need to think twice before escalating any regional conflict; for example, one with Iran, which would likely push oil prices significantly higher.

 

 

 

      

The great danger, though, about predictions of energy independence is that policy makers who act on unreasonable optimism about the nation’s energy future could do major damage.

 

 

      

The United States is reconsidering its approach to military spending and strategy in the face of budget pressures. Policy makers who believe that the Middle East matters far less because of looming energy independence might end up dangerously neglecting the region. Some Middle Eastern leaders already fear such an outcome and may hedge their bets by cozying up with others. America’s Middle East strategy may be due for a change, but the notion of energy independence should not drive those decisions.

 

 

      

Unjustified expectations about energy independence might also make lawmakers less interested in pursuing measures to reduce oil consumption. But the nation’s vulnerability to events overseas and to volatile oil prices still stems from the amount that Americans spend on oil. That is why government steps to reduce the demand for oil — whether through tougher fuel economy standards, support for technological innovations or other means — remain essential regardless of where America’s oil comes from.

 

 

      

An exaggerated sense of independence could also lead policy makers to interfere with open trade in dangerous ways. People eager to keep the newfound bounty of shale gas at home have attacked plans to allow natural gas exports. Similar fights may arise over oil exports and foreign investment in the domestic oil industry. Blind faith in free trade is unwise. But the United States still depends on relatively open global markets, which wrongheaded policies could undermine.

 

 

 

       

The benefits of the oil and gas boom — jobs, wealth and, in the case of natural gas, reductions in greenhouse gas emissions — offer plenty of reasons to continue to develop these resources judiciously. But we should beware of turning this potential blessing into an unintended curse.

 

 

 

Michael A. Levi, a senior fellow at the Council on Foreign Relations, is the author of the forthcoming book “The Power Surge.”