Crude oil priced at the storage hub in Cushing currently trades for much less than Brent crude priced in London, so the notion of producing enough oil to eschew imports seems like a potentially positive development for consumers.
But that may not necessarily be the case.
Oil will continue to be a globally traded commodity, even if the U.S. is getting its crude from Texas and North Dakota instead of Saudi Arabia and Venezuela, so the world market will set its price, said Rayola Dougher, senior economist at the American Petroleum Institute.
She said it is nearly impossible to predict what will happen to the price of oil if domestic production in the United States continues to rise, but an increasing supply of oil likely would apply downward pressure to prices and benefit American consumers.
Lower oil prices could translate into reduced gasoline prices.
Oil at $100 a barrel equates to gasoline at an average of $3.56 a gallon, while AAA estimates $60 oil could push gas prices down to about $2.75 a gallon. Gas prices typically are lower in Oklahoma because of the proximity to refineries here and in Texas.
Shawnee resident Sherry Fair welcomes the possibility of lower prices.
Fair, who commutes to Oklahoma City three times a week for work, said lower gasoline prices would allow her to save money. She estimates driving to work is a 100-mile round-trip each day.
“It'd be a little increase in pay for me, if gas prices went down,” said Fair, who does public relations and marketing work for rural hospitals. “When you think about it, $20 a week times 50 weeks, since you get two weeks of vacation, is $1,000 a year.”
Economist Steve Agee, dean of the Meinders School of Business at Oklahoma City University, said energy independence would bring more stability to the energy markets.
“If you look at the oil and gas industry, the biggest problem has been volatility of price. Price swings trickle down to almost every aspect of life,” Agee said.
“There are so many petroleum-based products we use, when those go up, it affects our ability to use discretionary income for things other than transportation.
“To the extent we develop our own supplies, it is going to help us smooth out that volatility.”
Price volatility is a concern for the U.S. Chamber of Commerce and its Institute for 21st Century Energy.
Steve Eule, the institute's vice president for climate and technology, said its focus is not on energy independence as much as energy security.
“The terms are interchangeable,” he said, “but from our perspective the important thing is that you have a reliable supply.”
Eule said increased oil and gas production from U.S. shale formations and Canada's oil sands can help limit price volatility, making it easier for families to budget their expenses.
Chesapeake Energy Corp. CEO Aubrey McClendon said rising energy costs have hurt consumers.
He said the price of imported oil has nearly doubled since 2005, despite rising domestic production that has made the U.S. less reliant on imports.
“We export nearly $500 billion a year from our country to purchase oil,” McClendon said. “That's capital we could put to use investing in America's economy, creating jobs here, not there.
“This transfer of national wealth is one that we can't afford in good times, and certainly not in these tough times.”
Lower oil prices also could benefit manufacturers, who rely on petroleum products to create products ranging from calculators and cameras to pantyhose and latex gloves.
Ross Eisenberg, vice president of energy and resources policy for the National Association of Manufacturers, said energy independence could also make the U.S. more competitive globally by lowering manufacturing costs.
“Because of our policies on taxes, energy, tort and trade, it is 20 percent more expensive to do business in the U.S. than it is in the countries which are our nine largest trading partners — and that is excluding the cost of labor,” he said. “However, we actually have a slight cost advantage on energy right now relative to other nations.
“By pursuing even more domestic energy production, we can be increasing that cost advantage and making the U.S. the best place in the world to manufacture.”
Dougher said oil and natural gas currently account for about 60 percent of America's energy needs, a situation that likely will exist for the foreseeable future.
She said renewable resources like wind and solar power will play an important role in the future, but likely not enough to replace fossil fuels.
Renewables account for about 8 percent of the country's power, while the Department of Energy predicts those sources could increase to 14 percent by 2035.
Dougher said the issue facing the U.S. is where the oil it depends on will come from.
That is why those who advocate energy independence say the U.S. should get its imported oil from a friendly neighbor such as Canada rather than relying on countries in the always turbulent Middle East.
Dougher said 90 cents of every $1 spent on Canadian crude is returned to the United States, versus only 33 cents spent on oil from OPEC nations.
The U.S. imported 134 million barrels of oil from OPEC in July, according to the Energy Information Administration. That means buying oil from Canada instead of OPEC would have put about $6.87 billion back into the U.S. economy in July if the price of oil averaged $90 a barrel for the month. That is enough to pay 171,750 salaries at $40,000 a year.
ADAM WILMOTH, ENERGY EDITOR