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American Energy – Past, Present and Future

40 years ago, the West was gripped in the 1973 Oil Embargo by Middle Eastern oil producers as protest for American support of Israel during the Yom-Kippur War.

The embargo caused distrust between the United States and its Middle Eastern suppliers, which, after more than a decade of various military conflicts, has pushed many Americans to seek isolation from the area. Now in 2013, the effects of that embargo by OAPEC have continued to widen and the United States is taking the lessons learned and packing its bags – to bring business back home, in the wake of opportunity.

From its birth in the aftermath of 1973, the drive for energy independence has always been political. Presidents have espoused energy independence as a national security measure that will end American involvement in unstable regions (interestingly only about 15% of America’s oil is imported from the Middle East) and give them a free hand when dealing with corrupt and oppressive regimes.

This is because the ‘oil weapon’ is perhaps one of the greatest threats to the United States and its military besides nuclear warfare. To put the reliance on oil in perspective, the U.S. military consumed about as much oil in 2006 as the entire nation of Nigeria. The political realities of having the most powerful militarized force on the planet and being open to serious collateral stresses on the economy by less capable nations or money hungry industries, is at least as frustrating as it is embarrassing for a supposed unipole. Such facts though cannot be ignored, as the rise of gas prices after the start of the Iraq War can testify – in full the cost is a 65% rise in cost attributable to the Iraq War from 35$ a barrel in 2003 to 130$ a barrel in 2008, and now to 105$ a barrel as of August 1 2013.

Of course, anything political is at least in part economic, and the drive for energy independence in the United States has taken on a life of its own after years of government policy initiatives and domestic production slump. Finally, after decades of encouragement the opportunity for domestic growth and investment arrived in 2006, after the United States imported 60.3% of its oil consumption in 2005, the highest dependency on foreign imports on record. This toll on the United States, magnified by oil prices of 130$ a barrel, pushed oil companies to seek alternative means of extraction – alternative means such as new horizontal drilling, paired with hydraulic fracturing that have opened new possibilities for dominance to an aging hegemon.

These means of oil and natural gas extraction means that previous sites of resource deposits thought unattainable are now within grasp and are key targets of the rising domestic oil industry. The rate of this industrial expansion is remarkable – since 2008, American oil imports have dropped by 26% and America is likely to become the world’s top oil producer in 2017, eclipsing even Saudi Arabia. Perhaps more impressive is that according to other sources, including the International Energy Agency – America will be energy independent by 2020.

So what does this mean for the world? For the economy, perhaps this is indeed the boom that will drive America forward into much of the rest of the 21st century as speculated by Christopher Helman in Forbes.

In political terms, it does not mean that the United States will be able to become an isolationist state. It will still have interests in the Middle East that will remain crucial to its status as a global superpower as the rising power of China, India and a resurgent Russia seek to challenge its traditional allies and its sphere of influence with regimes such as Iran and Syria as tools in this great game.

In environmental terms at least, the picture is less clear cut. As oil production in the United States has exploded, clean energy advancements have continued to be a staple of American energy independence – with government subsidized initiatives and regulations promoting renewable energy across the United States, while organizations like the military have begun working to reduce their oil expenses under a constricting budget.

The question remains though, in a new environment where oil is abundant at home – where is the incentive for America to continue research and encouragement of expensive and slowly developing clean energy initiatives that do not offer the same economic drive as oil?

– Adam Templer

(Featured photo: PaternitéPas d'utilisation commercialePartage selon les Conditions Initiales swisscan, Flickr, Creative Commons)

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