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Oil consumption in America remains an important issue for our economy and for our national security.  Daniel Yergin, Chairman of IHS Cambridge Energy Research Associates, has recently shown that US oil consumption reached its peak demand in 2005 and has since declined.  The nation has become more efficient in its use of petroleum and has secured new energy sources.  How did this startling development occur?  Yergin summarizes several remarkable developments:

• US crude output has risen by 18% since 2008.  Both deep-water and onshore oil output has increased.  What is called ?tight oil,? which is extracted from dense rocks, has increased dramatically.  Today, tight oil production is about 1 million barrels per day.  By the end of the decade, it could be at 3 million barrels per day.
• The same technology that has produced ?tight oil? (hydraulic fracturing and horizontal drilling) has also created the explosive growth in natural gas production from shale rock.
• Oil extracted from dense rock and shale means lower imports, lower bills for these imports and substantial job creation within the US.  For that reason, North Dakota has become the nation?s 4^th largest oil-producing state, after Texas, Alaska and California.
• Persian Gulf oil represents only 16% of our imported oil per year and politically hostile Venezuela now only 9% per year.  Our greatest sources of imported oil are Canada (25%) and Mexico (11%).  This is, therefore, the importance of the Keystone XL pipeline controversy.  If we do not permit this pipeline, this oil will go to China.  It is in our national interest to make this pipeline work.  It makes no sense to permit Canada?s oil to go to Asia!
• Yergin concludes:  ?. . . the shift in oil sources means the global supply system will become more resilient, our energy supplies will become more secure, and the nation will have more flexibility in dealing with crises.  It would also mean that economic benefits?in terms of jobs, manufacturing and services?would register on the ground in North America.?  Rising tensions with Iran and the volatile Middle East can be offset by the growing supply of oil and natural gas from within North America itself.

Yergin?s study and summary of the energy situation in the US is one of the most encouraging developments for America in quite some time.  May our political leaders understand this and not thwart what is one of the most liberating energy developments in recent history.  The Keystone XL pipeline is just one example.  If we are serious about energy independence, the Keystone pipeline is one clear path toward that goal.

See Yergin?s essay in the Wall Street Journal (12 December 2011). PRINT PDF