Like many of America’s toughest challenges, the nation’s reliance on foreign oil has long seemed a puzzle beyond our capacity to solve. But that is changing—and in a way that offers clear lessons for tackling the other big problems confronting the United States.
Reducing American dependence on imported oil has been an explicit goal of every president since the embargoes of the 1970s. But under Republican and Democratic presidents alike, the effort has seemed as futile as commanding the tide. Imports (after subtracting U.S. oil exports) rose from providing just over one-third of America’s oil around the time of the first embargo by the Organization of Petroleum Exporting Countries in 1973 to about half by the late 1990s before peaking at 60 percent in 2005.
But our dependence has declined in every year since. In 2011, imported oil provided just 45 percent of America’s supply, the lowest share since 1995. The Energy Information Administration projects that imports will drop to just 38 percent by 2020. Many private analysts expect an even greater decline.
Several dynamics have contributed to this turnaround, including the economic slowdown that depressed energy demand. But the most important factor has been that the U.S. is finally attacking the problem from both directions, by increasing domestic oil production and improving energy efficiency. The success of that comprehensive approach should guide Washington’s response to the other big challenges the country faces, including the national debt.
The most visible change in the oil equation has been increased domestic production. After a fairly steady decline since the 1970s, total American production has grown from about 5 million barrels per day in 2008 to 5.7 million in 2011. EIA expects production to hit 6.7 million barrels per day by 2020, and some analysts (including an industry-led Energy Department advisory panel) think that daily production eventually could reach 10 million barrels. All forecasters expect a huge increase in domestic natural-gas production as well.
Less visible have been unrelenting improvements in the way Americans use energy. Paul Bledsoe, a senior adviser at the Bipartisan Policy Center (where, full disclosure, my wife works), points out that the United States now consumes less than half as much oil to produce each dollar of economic output as it did in 1975. Fuel economy for America’s fleet of cars and trucks has climbed steadily since 2002, after stagnating for the previous decade.
These gains are rooted in federal policy initiatives, including tough energy-use mandates for appliances, and, above all, decisions by President Bush in 2007 and President Obama in 2009 to break a long stalemate and significantly raise efficiency standards for vehicles. Obama’s latest fuel-economy proposals are projected to eventually save 2.2 million barrels of oil per day.
The production gains owe less to public policy than to private breakthroughs, particularly innovative technologies (such as hydraulic fracturing, or “fracking”) for finding and recovering oil and gas. About two-thirds of American oil and gas production occurs on private land, but Washington has sent a clear signal by opening more public lands to exploration and allowing the 1980s-era ban on offshore drilling to lapse during Bush’s administration. After banning deepwater exploration for five months to impose new safeguards after the catastrophic BP spill off the Louisiana coast in 2010, Obama recently announced plans to open about three-quarters of offshore reserves to exploration over the next five years. Even with the temporary ban, federal figures show that producers have so far recovered more oil from public lands per year in Obama’s term than during Bush’s last.
Mitt Romney and other Republicans nonetheless argue that Obama is moving too slow in increasing production and too fast in ratcheting up fuel economy. Romney undoubtedly would lean harder on the first of those dials and Obama the second. But whoever wins in November is likely to continue advancing both initiatives. That itself is a critical change from much of the previous quarter-century, when each political party, in a form of mutually assured destruction, focused its energy agenda mostly on blocking the other’s top priority.
“For two decades, you couldn’t expand drilling and you couldn’t increase fuel economy,” Bledsoe says. “And that blew up with the increase in oil prices around 2006. Now, both parties are for both.”
Greater independence from foreign oil won’t necessarily solve our other two key energy challenges: maintaining affordable prices and reducing greenhouse-gas emissions. (In fact, higher prices actually spur independence by promoting both efficiency and exploration.) But the breakthrough on oil dependence came largely because Washington finally acknowledged that it is not incompatible to expand near-term production of fossil fuels (since we’ll be burning plenty of them for years under any scenario), while also nurturing efficiency and renewable technologies that help address long-term challenges such as climate change.
More could be done on each of these fronts. But what’s working on energy is a strategy of “both-and,” not “either-or.” The president who takes the oath in January should remember that when considering his other key challenges, particularly the debate over whether spending cuts or tax increases are the key to taming the ominous federal deficit.
This article appears in the March 31, 2012, edition of National Journal.