Energy independence: What are the benefits?

In 2005, the United States imported more than 3 billion barrels of oil from countries outside of North America at a total cost of about $300 billion. If the country were energy independent, that money could have been spent within the United States.
by Adam Wilmoth Modified: September 29, 2012 at 4:29 pm •  Published: October 1, 2012

For much of the past four decades, American presidents have been calling for energy independence as a solution to the country's economic and military problems.

Today, many energy industry leaders have embraced the concept and have expanded on the potential U.S. and global benefits.

“I don't know that from a policy standpoint it is mandatory that we achieve 100 percent independence, but not being overly dependent is really important,” Oklahoma Energy Secretary Mike Ming said. “For the U.S. to have more options and be more independent, it reduces our national security vulnerability and makes more oil available to the rest of the world, which enhances geopolitical stability to the rest of the world.”

Arguments in favor of a decreased reliance on foreign oil lean mainly toward national security, job generation and wealth creation.

National security

The United States spends $166 billion – or 24 percent of its defense budget – on securing access to oil, according to a 2010 report by Princeton professor Roger J. Stern. The country spent $7.3 trillion keeping U.S. aircraft carriers in the Persian Gulf from 1976 to 2007, Stern found.

“Our past 40-year dependence on OPEC (the Organization of Petroleum Exporting Countries) puts our country's future in peril for all Americans,” said Aubrey McClendon, CEO of Oklahoma City-based Chesapeake Energy Corp. “At our import peak in 2005, we accessed more than 60 percent of our oil from outside our borders, including oil from countries with unstable governments and hostile positions to our democracy.”

For the past decade, the United States has been involved in two wars in the world's most oil-rich region.

“When you're buying from OPEC, you can count on some of that money getting to the Taliban,” billionaire oilman T. Boone Pickens said. “You're paying for both sides of the war. I think you're stupid to do that.”

Creating wealth

Pickens and others say creating more wealth in the U.S. is also closely tied to oil imports and exports.

At the peak in 2005, the U.S. imported more than 3 billion barrels of oil from countries outside of North America at a total cost of more than $300 billion a year, or almost $1,000 for each American.

The country's trade deficit that year was about $700 billion.

By eliminating or reducing imports, proponents argue, the country could reverse its trade deficit. Some say the U.S. could even become a net energy exporter.

“If you look at the natural gas we have, it's not unreasonable that we could start exporting natural gas,” said Larry Nichols, executive chairman of Oklahoma City-based Devon Energy Corp. “Instead of making the United States a huge importer of oil and an exporter of wealth, we could reverse that.”

Wealth creation also would lead to a growing economy throughout the United States, said Harold Hamm, CEO of Oklahoma City-based Continental Resources Inc.

“I'm not talking about the oil company's wealth. I'm talking about the people in Ohio who build our pipe, the manufacturers who make the pickups we're driving,” he said. “Then so what if we have oil and gas companies having profits here and hiring American workers instead of making some Arab sheik rich?”

In Oklahoma, the oil and natural gas industry directly represents 71,000 jobs, which is about 3.5 percent of the state's workforce, and the industry's activity supports nearly 300,000 jobs, according to the Oklahoma First Energy Plan of 2011. Oil and natural gas gross production taxes provided about $1 billion in state tax revenue in 2011.

Increased North American energy production also is leading chemical plants and manufacturers to build and expand their domestic operations. Dow Chemicals recently announced plans for a new $4 billion ethylene plant in Freeport, Texas, to support the plastics industry. The facility is expected to open in 2017 and employ 2,000 people at the peak of construction.

“Ultimately it makes us all wealthier,” said Tom Ward, CEO of Oklahoma City-based SandRidge Energy Corp. “The more oil that we can produce in our own country, the less we have to import and send money to other parts of the world, and the foreign investment we're getting into the country today is only helping the consumer.”

Over the past two years, large state-owned energy companies from China, Japan and France have partnered with Oklahoma City-based energy companies in their efforts to produce oil and natural gas throughout the United States.

Continue reading this story on the...

by Adam Wilmoth
Energy Editor
Adam Wilmoth returned to The Oklahoman as energy editor in 2012 after working for four years in public relations. He previously spent seven years as a business reporter at The Oklahoman, including five years covering the state's energy sector....
+ show more


Trending Now


AROUND THE WEB

  1. 1
    Former Texas Tech DC Matt Wallerstedt says 'don't believe' rumors of dismissal
  2. 2
    Sex crime charges filed against former Tulsa County sheriff's deputy
  3. 3
    White House will now lock the front door | WashingtonExaminer.com
  4. 4
    Report: Baker Mayfield to receive a third year of eligibility effective immediately
  5. 5
    OU football: Tony Jefferson making an impact with Arizona Cardinals
+ show more