continuing improvement of regulatory activities among the states.
Gas and Oil Imports, Exports US imports and exports of energy
have been a major issue for almost 70 years. Until the end of the last decade, it seemed that the main question about oil im- ports was how fast they would increase as a share of total consump- tion; and, for gas, how large the exports would become. Tis uncon- ventional revolution has turned around the direction of imports. US net imports of oil have declined from a peak of 60% in 2005 to about 40% today. Tat is the consequence of surging tight oil pro- duction, and reduced demand, owing to both greater efficiency and the weak economy. Moreover, the flow of imports has changed. Canada now supplies about 27% of total US imports. Net imports of crude will continue
free flow of energy supplies one of the cornerstones of foreign policy. It is a principle we have urged on many other nations. How can the US, on one hand, say to a close ally like Japan, suffering energy shortages from Fukushima,
to how the unconventional revolution will affect US involvement in the Middle East is moving to the fore. Current net US imports from the Persian Gulf are equivalent to 8% of total consumption, as it is. Even if that number goes down,
This outcrop in Highland County, VA, is part of the Marcellus Shale, which has helped propel the US unconventional gas and oil revolution.
‘please reduce your oil imports from Iran,’ and on the other, turn around and say that new natural gas exports to Japan are prohibited?
to decline. But the US will continue to remain a net importer for some time. Our import levels are still higher than they were at the time of the first oil crisis, in the 1970s. However, we will see the Western Hemisphere, and North America in particular, moving towards greater self sufficiency. At the same time, the very large, technically- advanced refining complex on the Gulf Coast—along with the shiſting domes- tic product demand—will put the US in the position to continue to expand exports of refined products. While markets and economics will
eventually determine the realistic scale of US exports, one also has to take into account wider considerations in assess- ing policy regarding future exports. For decades, the US has made the
The Geopolitical Impact One immediate impact has already
been cited. Tighter sanctions on Iran have succeeded in taking half of Iran’s oil exports out of the market, even as global demand for oil continues to expand. Te increase in Saudi output was part of the formula. But also of great importance has been the growth in US supply—at a rate higher than generally anticipated. Certainly expanded domestic sup-
ply will add to resilience to shocks and add to the security cushion. Moreover, prudent expansion of US energy exports will add an additional dimension to US influence in the world. However, there will remain only one global oil market, and a major disruption anywhere would affect the entire market. Te question as
the nature of US interests in the region go well beyond direct oil imports to the importance of the region for the global economy and global security. Altogether, the unconventional oil
and gas revolution has already had ma- jor impact in multiple dimensions. Its significance will continue to grow as this revolution continues to unfold.
Daniel Yergin is Vice Chairman of IHS and founder of IHS Cambridge Energy Research Associates. He is author of “The Quest: Energy, Security, and the Remaking of the Modern World” and re- ceived the Pulitzer Prize for his book “The Prize.” He serves on the US Secretary of Energy Advisory Board. This article is excerpted from Yergin’s testimony before the Subcommittee on Energy and Power of the House Energy and Commerce Committee on February 5, 2013. SME thanks the US House of Representatives for making these remarks available.
Energy Manufacturing 2013 19
Photo courtesy US Geological Survey/photo by James Coleman
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