Energy independence: More U.S. oil production may limit price volatility

What would energy independence mean for gasoline prices, utility bills, plastics, groceries and other consumer expenses? How would domestic jobs and the potential for a stronger economy affect individuals throughout the country?
BY JAY F. MARKS jmarks@opubco.com Published: October 8, 2012

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.

CONTRIBUTING:

ADAM WILMOTH, ENERGY EDITOR



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