Beyond energy

The ripple effect of North American energy production

The North American energy transformation that has altered the global energy picture does not end there.

North American oil and natural gas production has increased in the past decade, and Americans are becoming aware of the positive implications for our economy and for North America’s growing relevance as a global leader in energy production. The story resonates at a very basic level, America’s economy and national security.

Rebalancing trade

The robust production out of North American shales is providing the U.S. with the ability to reshape our foreign policy and become an even more influential player in the global energy game. According to the Energy Information Administration, the share of total U.S. liquids fuel consumption met by net imports fell from 60% in 2005 to an estimated 25% in 2016, a drop of 60%.1

U.S. oil imports falling, exporting rising

Energy Information Administration Short Term Energy Outlook, April 2017.
The projections on this page are based on industry estimates and are no guarantee of future outcomes.

The dramatic shift from importer to exporter of these natural resources has the potential to significantly reduce the current U.S. trade deficit. What’s more, in addition to falling imports, the U.S. is becoming an exporter to global markets. 2016 was a milestone year for the U.S. energy sector. U.S. produced crude oil was exported and ethane, a liquefied natural gas (LNG) was also exported outside of North America. This positions the U.S. as a supplier of low cost energy to the rest of the world.

Attracting foreign manufacturers

North America’s abundant supply and low cost of natural gas could also be the carrot that attracts foreign manufacturers to U.S. shores. That’s because the cost of natural gas varies greatly from country to country. While prices fluctuate, the map below provides an example of cost differentials for natural gas in the U.S., the U.K. and Japan.

Natural gas prices around the globe

Source: Bloomberg as of 3/31/2017. Price per USD/MMBtu

North America’s abundant supply and low cost of natural gas could also be the carrot that attracts foreign manufacturers to U.S. shores. That’s because the cost of natural gas varies greatly from country to country. 

Stronger national security

National security and energy are increasingly intertwined, and the security implications of the oil and gas boom are staggering. In the wake of the OPEC Oil Embargo of 1973–1974, during which the U.S. had to ration gasoline, greater energy independence has become increasingly important, both as a means to improve our national security and to underscore our relevancy as a global leader in energy. Energy self-sufficiency provides the attendant ability to reduce foreign threats, moving the balance of power away from politically questionable and unreliable energy producers and effectively altering the geopolitical order. To think that the U.S. military has been one of the largest purchasers of oil in the world puts energy security in a new light.

Forging ahead

Clearly, the North American energy transformation is well underway, bringing with it a host of significant benefits and opportunities. It also brings the innovative, pioneering American spirit that drove our nation’s early efforts to build the highly functioning, efficient and technologically advanced economy that today serves as a foundation of American society and our future.

    1. Energy Information Administration, May, 2017

Energy self-sufficiency provides the attendant ability to reduce foreign threats, moving the balance of power away from politically questionable and unreliable energy producers and effectively altering the geopolitical order.