What is Energy Independence and Is It Attainable?

This content has been archived. It may no longer be relevant

When a US election season is in full swing or gas prices at the pumps start to rise, the discussions among partisan politicians and constituents alike turn to the phrase “energy independence.” But what does energy independence mean, and is it reasonable to expect that the United States will ever achieve it?

Who was the first to coin the phrase?

Up until the early 1950s, the United States produced most of the energy it consumed. By the mid-1950s, the US began to import larger amounts of crude oil and petroleum products (i.e., gasoline and distillate fuels) to fill the gap between energy consumption and production.¹ Over time, the US saw consumption continue to outpace production, leading to the desire for energy independence.

Richard Nixon is believed to be the first to use the phrase, in a radio address on the national energy situation on January 19, 1974, addressing the Organization of the Petroleum Exporting Countries’ (OPEC’s) halt of oil shipments to the United States, which caused US gasoline and heating prices to more than quadruple. The last few sentences of Nixon’s speech were:

The distance between the winter of 1974 and the springtime of energy independence for the United States remains great. We must proceed with confidence in our ability to do the job. Far more importantly, we must act now, as one people to do the job that must be done.

With the proud dedication we Americans have always displayed when confronted with great challenges, we can and we will achieve the great goal of Project Independence. Where energy is concerned, we, the American people, shall be the sole masters of our fate.²

Since that time, the US has passed the Energy Policy and Conservation Act (1975; which created the Strategic Petroleum Reserve), established the Department of Energy (1977), released a National Energy Policy (2001), and passed the Energy Independence and Security Act (2007; which imposed higher fuel-efficiency standards for vehicles and promoted greater biofuel production, among many other things), all to achieve energy independence.

What does “energy independence” mean?

To some, the concept of energy independence simply means that the United States produces more energy than it consumes. To put it another way, if the US exports more coal, natural gas, petroleum, and petroleum products than the amount of oil it imports in a given year, then the country is energy independent.

Following this first definition, the United States is energy independent and has been since 2019, when the US became a net total energy exporter for the first time.¹

But to others, energy independence is defined as a non-reliance on any foreign oil products, producing all the energy the country consumes without participating in the international trade of energy. Following this definition, the United States has never been energy independent and likely never will be, for several reasons.

Why does the US import oil?

While the US is a massive producer of petroleum products and is poised to be the world’s top exporter of liquefied natural gas (LNG) in 2022³, the country still relies on the import of crude oil and other energy products and remains vulnerable to the global trade market’s prices. Some believe the increase in US oil and gas production from hydraulic fracturing (fracking), coupled with the US oil reserve, should be enough to achieve independence from foreign oil. However, there are a few reasons why it is unlikely the US will stop importing entirely.

Private businesses make financially advantageous decisions

Oil production in the US is a private business, and therefore, each producer must ponder the business decision of whether additional production makes financial sense. When oil prices collapsed in 2015, and again in 2020, producers were left with a less valuable product to sell.

For refinery owners, it can be more profitable to buy low-cost unfinished energy from other countries and turn it into higher-value petroleum products to use both domestically and to export.

Unlike other oil-rich countries, the US government cannot open and close its resources or compel oil companies to drill more.

Refineries not designed for light crude or foreign-owned

While the US East Coast refiners are designed to handle lower-quality (light) forms of crude oil, the kind produced through fracking³, many US refineries were built before the fracking boom, and the cost to build new refining plants or remodel the older ones to handle lighter crude is not considered cost-effective.

In 2016, it was reported that 28% of US refineries were foreign owned.⁵ North America’s biggest refinery, Motiva, in Port Arthur, Texas, is owned by Saudi Arabian oil giant Saudi Aramco and imports crude from its overseas affiliate for processing in the US.³

Geographic factors make transportation costs a factor

Petroleum products need ships, pipelines, rail systems, and trucks to move the liquids from one geographic location in the US to another. Much of the US oil production occurs in the middle of the country, making transport across the Rocky Mountains difficult and expensive.

California and other West Coast refiners have relied on imports, often from Russia, because it was more affordable than the logistics of getting it shipped across the United States. Even oil in closer proximity still presents financial challenges to western states. This is especially true for crude produced in the Permian Basin, which spans through west Texas and southeastern New Mexico.  California has no pipeline connection to this oil and gas-producing area⁶, so while it is close by, it remains inaccessible.

Building a better future for energy

For the US to no longer rely on foreign oil products, oil and gas CEOs would have to make an investment in new or upgraded refineries and explore the millions of acres of public lands currently controlled, but not being used, to produce oil. Their business model and profit margins would also need to be re-evaluated.

Americans would have to embrace the idea of clean energy and invest in things like electric vehicles, solar panels for their homes, and other renewable energy technologies. A significant investment by the US government would be needed to reduce energy consumption and promote clean energy alternatives, like solar farms, wind farms, and geothermal plants.

In the meantime, oil and gas exploration, production, and refining will continue in the US. LabLynx will, in turn, be there to provide laboratory information management systems (LIMS) to those labs that work to ensure accurate testing for composition, purity, and presence of contaminants during all phases of oil and gas production, resulting in a quality product to fill our gas tanks and heat our homes.

References

¹ https://www.eia.gov/energyexplained/us-energy-facts/imports-and-exports.php

² https://www.nytimes.com/1974/01/20/archives/transcript-of-nixons-speech-on-energy-situation-a-call-for.html

³ https://www.cato.org/commentary/actually-america-isnt-energy-independent-thats-good-thing

⁴ https://www.reuters.com/article/factcheck-energyindependence-explainer/fact-check-which-factors-determine-u-s-energy-independence-idUSL2N2VQ2ZV

⁵ https://www.timesrecordnews.com/story/news/columnists/alex-mills/2016/11/03/foreign-entities-own-28-us-refining-capacity/93237936/

⁶ https://www.cnn.com/2022/03/15/politics/energy-independence-fact-check/index.html