Earlier this week, the International Energy Agency released its annual flagship publication, the “World Energy Outlook.” Proponents of the goal of North American “energy independence” (the idea that the United States can rely exclusively on its own energy sources for consumption and therefore protect itself from shocks in the world energy system) have been quick to add the IEA’s report to their arsenal without fully understanding the whole picture.

IEA forecast for U.S. oil production and demand vs. Saudi Arabian production (Million barrels/day)

Note: Not all policies are currently in place to achieve the U.S. demand reductions in this forecast.

Source: Oil Change International, http://bit.ly/TBDtmi

The section of the report in question predicts that the U.S. will become the world’s largest oil producer before 2017, vastly increasing its fossil fuel production and revenue as the tech-driven hydrocarbon revolution in the United States accelerates in full force. Some in the energy industry are therefore reading the 2012 “World Energy Outlook”, as a signal that private sector production of hydrocarbons should be pursued with all possible haste. The technological change, according to oil enthusiasts, will somehow solve most of the financial woes of New York and California, conquer deficits, and fund education and social programs. Further, achieving energy independence will mark a decades-long achievement that presidential administrations as far back as Richard Nixon have all sought.

However, actually digging into the real message of this year’s World Energy Outlook paints a very different picture. Most of the coverage summarized above focuses on only a handful of the report’s nearly 700 pages that discuss the ongoing U.S. oil boom. The majority of the report provides a firm warning against the unchecked exploitation of domestic American oil in three primary areas.

First, the United States’ ability to lead the world in oil production is realistically limited to between five and ten years at most. Second, in order to achieve the production levels necessary to reach the status of number one oil producer for even such a short time, the United States would have to excavate almost all of its fossil fuel reserves, greatly contributing to catastrophic climate change. Because, according to the IEA, over two-thirds of today’s proven reserves of fossil fuels need to still be in the ground in 2050 in order to reach the “2 °C goal,” the internationally recognized temperature increase limit needed to prevent disastrous global warming. Third, according to the IEA’s main scenario, which assumes a certain amount of efficiency policy that is yet to be implemented, the U.S. could still be consuming 5.5 million barrels per day more than it is producing in 2020, when the oil boom is likely to peak.

Source: Oil Change International, http://bit.ly/QDWkT4

The myth of energy independence is one that we here at ASP have repeatedly attempted to puncture. As Michael Makovsky, a Pentagon official in the George W. Bush administration has argued, “the oil market is still global, and the North American oil market will still be greatly impacted by developments in the Middle East.” Regardless of U.S. domestic production, the prices at our pumps at home are set by international market forces far beyond unilateral American influence.

In a strategic context, maintaining the stability of oil shipments through contentious hotspots like the Suez Canal and Strait of Hormuz (50 percent of the global oil trade is expected to regularly pass through the latter in 2035) will remain a priority for the American military regardless of the domestic energy boom. A disruption to the security of these waterways would affect all consumers of oil, including the U.S. and its allies.

Finally, it should be obvious that burning American rather than Saudi oil brings few environmental advantages. As the IEA points out, the damage to the climate will continue as long as fossil fuels play such a huge role in our energy consumption. The ongoing oil boom in the United States, while seemingly a positive development, will do little for America’s long-term energy security, and to the extent that it delays a transition to alternative sources of energy, it will exacerbate climate change.  The IEA report should therefore not be taken with wild optimism; rather, it should offer a reminder that much work is needed to accelerate the development of cleaner energy technologies.

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