A very smart student recently inquired about whether the United States (US) should be considered an energy consumer or an energy producer given the boost in oil and gas production seen in the past few years – thanks to the shale revolution. A very good question, as the whole consumer/producer differentiation is becoming increasingly fuzzy in real life.
So, let’s see…
Many were excited when the US produced more oil than it imported.1 However, this does not move a country in between being a producer and being a consumer.
It is more useful to think of the consumer/producer conundrum as a matter of energy independence. Is a country free from others in terms of satisfying its energy needs? If you need to import fuel you will still need to behave as a consumer and lower the risks of supply, one way or another.
As it can be seen in the figure below, the US has ALWAYS imported more energy than it exports.
Figure 1: US Energy Overview – Total Primary Energy (quadrillion Btu), 1949-2014. Source: EIA, 2016, p. 2.
Second. Of course, nothing is that simple. US’s dependency varies greatly depending on the specific source of energy.
For example, as shown in the figure below, as of 2018 the US has virtually closed the gap when it comes to gas. The country continues to import a little bit more than it exports, but very little. I am not saying that this would be economically smart to do, but, if forced to, US could rely on internal resources.
Figure 2: US Natural Gas Trade – Total Imports & Exports (Billion Cubic Feet), 1973-2018. Source: EIA, 2016.
A different picture is seen with oil, however. US’ oil production has skyrocketed. It went from ranging the 6-7 million barrels per day in between 2005 and 2009 to almost 13 million barrels per day.2 However, as seen in the following graph, the country still imports a lot of oil.
Figure 3: US Oil Trade – Net Imports (%), 1973-2018. Source: EIA, 2016.
In fact, the US is unlikely to ever be a net oil exporter at current trends. This is because the gap is of about 4.2 million barrels per day.3 Output grew after the shale revolution but eventually hit a ceiling when oil prices forced the closure of almost a thousand rigs in 2015.4 An increase in prices will likely lead to their re-activation, but it is hard to imagine that to be able to reach ~4 million additional barrels per day in the foreseeable future.
This is not to say that the US will not continue producing massive amounts of oil, but it does seem unlikely that it will become independent as such. This is an important consideration given that oil, rather than gas or coal, has been the main driver of American energy diplomacy since the times of OPEC’s embargo in 1973.
The US may, however, behave less like a desperate consumer.
There’s a new word out there to refer to households that both buy and sell electricity from/to the grid. That word is ‘prosumer‘. Hideous word. However, we may be in dire need of one similarly-terrible word to describe a country that is both a gigantic producer and massive consumer at the same time.