USA Energy Independence Day

It has been 3 years since I last looked at US energy statistics and a recent conversation has prompted me to revisit the topic. Is the USA close to energy independence? The answer is surprisingly yes! In 2007 the USA imported 708 Mtoe (million tonnes oil equivalent) of energy, mainly crude oil. In 2015, that had fallen to 234 Mtoe. The rate of decline is 59.25 Mtoe per annum and if the trend continues the USA will be energy independent in 4 years. It is to be anticipated that the oil price crash will impact oil production in 2016 and 2017 but I wouldn’t bet against the US becoming energy independent in the early years of the next decade.

Figure 1

Let us begin with a look at primary energy production (Figure 1). We see that rising energy production began around 2010, down to the “shale miracle”. In this period energy consumption has been flat (Figure 2) hence the improved energy balance is entirely down to more home grown energy production. We see that the growth has come from oil and gas and that coal is in retreat. New renewables (solar, wind and other) have been growing at a tremendous rate but remain barely relevant at 4% of total primary energy produced.

Figure 2

Primary energy consumption was growing slowly until 2007 when the weight of high energy prices eventually caused consumption growth to stall and to fall sharply in 2009 on the back of the finance crash. Since then, in contrast to Europe, it has been trending sideways. Energy consumption in Europe continues to fall as the continent remains mired in € zone trauma and Bruxelles red tape. Natural gas consumption is rising at the expense of coal, presumably in the electricity generating sector.

Figure 3 The bars obove the zero line are exports and those below are imports and the blue line represents the balance between the two.

Deducting production from consumption provides the energy balance, a proxy for net imports and exports. I know some readers dislike this practice but it is a cheap and cheerful way to see the big picture. It is assumed (by BP) that all nuclear, hydro and renewable electricity is consumed at home and the balance on these categories is zero. Natural gas imports from Canada, that once ran at around 100 Mtoe, have all but disappeared. Oil imports are in steady decline down to the “shale miracle”. Coal exports are fairly steady while overall production and consumption are in retreat. It is perhaps surprising that the USA has not managed to grow its coal export market.

Figure 4

In so far as electricity consumption is a symbol of prosperity we see that growing prosperity in the USA halted in 2007 under the weight of rising energy prices and was severely dented in 2009 in the wake of the finance crash. Electricity consumption has been effectively flat since 2007 while new renewables are gradually increasing their share. I often wonder to what extent the low carbon focus of energy policy is negatively impacting the availability of affordable energy, placing a lid on economic growth. This is a good topic for the comments.

Figure 5

Wind, solar and other renewables now account for 7% of electricity generation, overtaking hydro. Is this a good or a bad thing?

Figure 6

Looking at all low C sources we see that growth in low C has been steady since 1965 but slowing after 1995 as nuclear went out of favour. All the recent growth in low C comes from renewables.

Concluding comments

The US energy system is being transformed mainly by expansion of shale oil and gas that has reduced US import dependency on both. Coal production and consumption is in decline as gas takes up a greater share of electricity generation. New renewables are growing rapidly but at 4% of total primary energy production remain small bit players. Assuming that Mr Trump does not win the presidency then we may also assume that energy policy will continue to follow the Al Gore track, growing low C until it breaks the power generation system. In the USA, that day is a long way off.

The “shale miracle” has well and truly placed the USA on track for energy independence early next decade. It is a miracle because most of the shale gas, and with current low price shale oil too, is being produced at a loss.

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18 Responses to USA Energy Independence Day

  1. pyrrhus says:

    Since shale wells are known to deplete very rapidly, and production companies cannot take losses indefinitely, I think that energy independence will require a further depression in demand. Not likely to happen if Trump is elected, but very possible otherwise, as the US is already in a recession…..I say that notwithstanding bogus government statistics…

    • Willem Post says:


      I am ignoring bogus statistics in below comment.

      What is happening in the US regarding energy independence is an aberration, due to shale oil efforts that likely cannot be repeated elsewhere in the world, and may have short longevity, i.e., a few decades at most.

      Regarding the world, this is more applicable:


      The below Harvard Business School study shows, US productivity growth has steadily decreased from 4.0% in 1951 to 0.4% in 2016
      US median household real incomes, steadily increasing from 1975 to 1999, have steadily decreased since about 1999
      US real economic growth was 2.6% in 2015, likely will be 1.6% in 2016
      That means, various groups fighting to grab their pieces of the increasingly smaller GDP additions
      The losers are steadily increasing percentages of various entities, including most of US households

      The real household incomes of at least 70% of US households have decreased since 2000, while the real prices of their goods and services have been increasing, such as of food, clothes, shelter, education, healthcare, taxes, fees and surcharges
      Those households are eating in, instead of out; buying used cars, instead of new; using lesser quality goods and services, i.e., making do
      That means their standard of living is decreasing, a reverse of the American Dream and Earnings.pdf

      That same process has happened in Europe, stifled by a Brussels EU bureaucracy; the dysfunctional Middle East, with decades of strife, and grossly excessive population growth; overpopulated Japan with an aging population; dysfunctional Africa; and dysfunctional south and middle America
      Economic growth is slowing in China, India and East Asia
      GWP growth has trended downward from 5% in 1965, to 3% in 2015; is estimated at 3.1% in 2016
      Future GWP growth likely will decrease, as since 1965, and likely will become zero, and then negative.
      That means more strife, riots, wars, and more refugees, while population will be increasing for decades

      The combined creation of phantom money, a.k.a., “quantitative easing”, by central banks has been well over $6 trillion since 2008
      However, the Q-E proved ineffective, and GWP growth continued to decrease
      Other factors, such as decreasing productivity, remain operative
      Q-E efforts likely will not be repeated
      With such trends, scraping up the scarce resources to “save the world” with RE build-outs appears less likely

      • Euan Mearns says:

        However, the Q-E proved ineffective

        Perhaps not. Without QE we may have seen a total collapse of the banking sector and a return to 1929. Growth built on credit expansion was clearly not sustainable. The normal course would have been a great depression, a resetting of the whole system. But instead we have a form of stagnation.

        The real problem that is manifesting itself on the political stage all over the world, is the lack of retribution in the banking sector. The people wanted blood but it never happened. The people blame the bankers for lending too much and not themselves for borrowing too much.

        The interesting question is did credit expand to the point where it could no longer be sustained by the energy available for economic activity?

        • Willem Post says:


          I agree, the QE temporarily prevented much worse, but the GWP downward growth trend since 1965 continued unabated. See URL.

          The US, Europe and Japan productivity downward growth trend also continued unabated.

          There was a temporary upturn in oil prices due to QE, but it soon faded to about $50/barrel, which likely is more realistic, given above trends, and increased RE, such as wind and solar energy.

          That means production from shale oil, tar sands, and difficult/expensive to reach oil reserves will be constrained in the future.

          The increased expense of wind and solar energy will be a factor for continuance of the GWP growth trend to zero and beyond, while population likely will be increasing for decades.

          Not a pretty picture for future generations.

          NOTE: There is no solution to these trends, except to very significantly reduce the world’s population and have the remaining people reduce their energy consumption per capita by at least 4 times (the level of 1800), and consumption of other resources per capita by at least 15 times (the level of 1800).

          This should not significantly affect living standards, because, at present, energy and other resources are used much more efficiently than in 1800.

          Those measures would enable maintaining 50% – 80% of the world in pristine condition, so the world’s fauna and flora could re-establish itself to a semblance of its former glory.

          The present, locust-type devouring of the world by humans, their animals and other support systems, is a major aberration, and clearly should not continue.

          Europe and Japan have near zero population growth. They could have steady negative growth without much effort.

          The rest of the world should follow that example, and it should have been part of the Paris accords to get China, India, etc., on board.

          Here is a US Army bison skull pile, due to Army kills and bounty hunter kills. Looks like a holocaust to me. See below table.

        • The Dork of Cork says:

          “The people blame the bankers for lending too much and not themselves for borrowing too much”
          I would dispute this but maybe you are somewhat correct, at least with respect to the more consumerist section of the population.
          But for sure now the banks are not now asking you to get into debt to expand capacity, they want you in debt to consume existing capacity which is even more perverse.

          More enlightened people blame bankers for claiming ownership of the community credit.
          I would point you to the James Dillions observations in the little Irish parliament during the July 1942 Irish Central bank act.
          It’s well worth a read ( he was considered our best and most incisive speeker)

      • Greg Kaan says:

        I fully agree with you Willem. QE will prove to have provided no real benefit to society.

      • mbe11 says:

        Vote Trump he will reset the system

  2. The data for North Dakota suggest that reality is catching up. Production went up to 1.2 mbd 22 months ago. Now, it seems to have dropped by 20%. More importantly, output per well has dropped from 105 barrels per day to 80. The best spots have already been drilled.

    I realise this is only a small part of the story, but it is difficult to find recent and precise data for other regions.

    Also, the reduction in energy usage per American has been a major factor in this turnaround – a 12% drop over past 17 years. I am not sure that is a “good thing”

    Clearly, if the financial system tanks, the USA may become a major oil exporter.

  3. John F. Hultquist says:

    It is perhaps surprising that the USA has not managed to grow its coal export market.

    The following will help explain why. And, of course, there are other reasons.

  4. Carlos Leiro says:

    the problem of tight oil and shale gas is the number of wells to be continuously form and also their price costo.Siempre be oil under the ground the downside is that price should have the possibility to continue giving continuity to a complex structure and dissipative as the economies of the countries and the real economy based on continued growth to be exponential is frightening. Art Berman seems to me a reliable source regarding the issue and tight oil shale

  5. Tony says:

    It may be technically possible for the US to reach energy independence for a few decades if the price of oil climbs back into the $100 range. In practice I very much doubt it will happen for the simple reason that it doesn’t make much sense for them to do so. As long as other areas of the world are prepared to sell their reserves at a very reasonable price why wouldn’t you keep importing? Canada is pretty close by and exports about 3 million bopd to the US and that oil is already developed and producing with no other market. Why spend the money to displace that production (much of which is owned by the US anyway). Canada also exports hydro power and would happily send natural gas again through existing infrastructure if the US needed it. The US has no strategic need to become energy independent as long as the continent doesn’t break apart.North America is already there or very close in energy independence and could be quite easily if it was an issue.

  6. gweberbv says:

    “I often wonder to what extent the low carbon focus of energy policy is negatively impacting the availability of affordable energy, placing a lid on economic growth.”

    Next to nothing. Just look how low most commodity prices are since a few years. If this low-cost environment does not kickstart economic growth, you have to conclude that commodity prices – and in particular energy/fuels – are not the limiting factor right now.
    And of course, they are not. People/institutions that have money, are reluctant to spend/invest it. And people/institutions who would like to spend/invest have no longer access to money or are hindered to use it. This is the situation all around the world. It’s just that. Plain and simple.

  7. RDG says:

    The prices are bullshit (“cheap” shale gas, renewables, etc) and the banks are insolvent. No wonder there is little investment in a world marxist dictatorship. The S&P 500 is up again, well I am totally shocked. Its the “market” (money printing) at work.

  8. The Dork of Cork says:

    “In so far as electricity consumption is a symbol of prosperity”

    I do not think it is.
    Electricity consumption in the residential sector may be seem as such given its a good proxy for final real consumption.
    More and more electricity used in the production sphere or lighting up the night sky etc etc does not increase peoples wealth.
    Its the reason the Us & uk outsourced production after all.
    However that system is breaking down as trade transmission costs again overpower final human consumption.

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