The Impact of U.S. Energy Independence on Foreign Policy

The United States has made significant strides towards energy independence, primarily driven by the shale revolution. With the consumption of 20 million barrels of oil per day and production of 11-11.5 million barrels, the gap is narrowing, thanks in large part to shale drilling, horizontal fracking, and advancements in shales. However, the road to complete energy independence is still long. This shift has profound implications for the U.S. foreign policy, defense budget, and global energy markets.

The Shale Revolution: A Partial Solution

While the shale revolution offers a glimmer of hope, it is important to recognize that these wells have steep decline curves, meaning they produce at a much lower rate over time. The Permian Basin remains one of the most productive areas, but finding similar areas of high productivity is increasingly difficult. If the U.S. were to achieve 25 million barrels per day, it could certainly have a significant impact, particularly in defense spending. Less dependence on Middle Eastern oil could lead to reduced military commitments in the region, shifting the U.S. sphere of influence.

From Energy Security to Energy Independence

The U.S. has shifted its focus from energy security to energy independence, largely driven by the exploitation of shale and unconventional resources. This shift not only affects domestic producers but also has significant implications for foreign policy. The U.S. is now committed to maintaining high world oil prices to ensure the profitability of its domestic energy industry. This commitment to an artificially restricted supply of fossil fuels is evident in a number of interventions and actions:

Strategic Interventions and Conflicts

The U.S. has engaged in a series of conflicts and interventions, each with the aim of disrupting or controlling energy markets:

Invasion and occupation of Iraq, which removed Iraqi oil from the market and raised oil prices to about $150 per barrel until the 2007-2008 financial crash. Invasion and destruction of Libya, with the goal of destabilizing the region and disrupting oil supplies. Operations in Syria, aimed at weakening the Assad regime and its allies. Occupation of Afghanistan to control the energy pipelines from Russia and Iran to South Asia. Sanctions against Iran to limit its oil and gas exports. Sanctions against Russia to restrict its oil and gas industries and prevent them from capitalizing on their resources. Sanctions against Venezuela to destabilize its government and energy production.

Energy Transitions and Environmental Implications

While the transition to energy independence is crucial, it is not without its challenges. Natural gas, for instance, presents a different set of issues. The U.S. produces more natural gas than it can consume, much of which is burned off at the wellhead. Improving the distribution of natural gas through pipelines could make it a significant energy source. However, the environmental implications are significant: burning natural gas still releases CO2, and building liquefied natural gas (LNG) facilities and ships requires substantial investment.

From an environmental perspective, natural gas is seen as a transitional fuel, particularly in the face of worsening global warming. While it can help displace coal and make renewable energy more viable during off-peak times, it is not a long-term solution. Financial leaders like Jamie Dimon have highlighted that discouraging natural gas production could lead to increased CO2 emissions, particularly in regions that rely on coal for power generation.

Conclusion

As the U.S. moves towards greater energy independence, it is crucial to balance the economic benefits with the geopolitical and environmental considerations. The shift away from energy security towards energy independence will require careful management to ensure that the U.S. does not sacrifice its strategic interests and environmental goals in the process. By understanding the complexities and challenges of this transition, policymakers can work towards a more sustainable and secure energy future.