Towards the end of the second U.S. presidential debate, a 34-year-old Illinois coal plant operator named Ken Bone asked the candidates “What steps will your energy policy take to meet our energy needs, while at the same time remaining environmentally friendly and minimizing job loss for fossil power plant workers?”
You might already know that the internet quickly memefied Ken Bone, ironically sensationalizing his innuendo-prone name, his “power outfit” red cardigan, and quirky demeanor. While one corner of the internet was exploding over Ken Bone’s unique charms, another corner was reacting to how Hillary Clinton responded to his question. Specifically, her claim that the United States is “for the first time ever energy-independent” was met with a barrage of tweets and references to Energy Information Administration (EIA) charts.
So is the United States energy independent? To answer in a word, no. But simply answering no leaves out a lot of the story. Let’s look at the question in a little more detail.
To gauge the independence and security of the U.S. energy system, it’s important to think about not only what sources of energy the United States uses, but also what those sources are used for. The figure below shows where the United States gets its energy on the left, and what that energy is used for on the right. The color-coded lines show how each energy source is distributed to residential, commercial, industrial, and transportation end uses. The units of measure are “Quads,” or quadrillion (1,000,000,000,000,000) British thermal units (Btu) of energy. The figure also shows what portion of U.S. energy consumption is “rejected energy,” or energy lost to inefficiencies in power plants, engines, buildings, etc.
An important takeaway from the chart above is that the vast majority of oil (petroleum) is used in the transportation sector. Likewise, nearly all of the transportation sector’s energy comes from oil. In other words, oil is mostly a transportation fuel in the United States.
On the other hand, essentially no oil is used in the residential, commercial, and industrial sectors, with the exception of oil used as a raw material to manufacture plastics, chemicals, etc. Building energy needs are covered by natural gas for heating, water heating, and cooking, and by electricity for everything else. And electricity is made from a mix of coal, natural gas, nuclear, and renewables — not oil.
This distinction is important because oil is really the only fuel for which the United States depends on imports. The uranium that fuels nuclear power plants is imported, but U.S. nuclear plants currently have so much uranium in storage that it would take over two years to consume it all. Solar, wind, geothermal, and hydro are inherently domestic energy sources. The United States is a net exporter of coal, and is poised to become a net exporter of natural gas for the first time in 60 years.
One portion of the U.S. energy system — the portion that runs on renewables, nuclear, coal, and natural gas — is energy independent. But the transportation system is still dependent on oil, and the United States imports a significant portion of its oil supply (mostly from Canada). The figure below compares U.S. oil consumption (the net inputs to U.S. refineries) to oil imports.
When politicians talk about energy independence, they are really talking about independence in the oil sector. Specifically, independence from the Saudi-dominated Organization of the Petroleum Exporting Countries (OPEC) oil cartel and any control it might exert on the global oil market to deliberately disrupt the U.S. economy. After all, what really started talk of energy independence by U.S. politicians was the 1973 Arab oil embargo, which led to skyrocketing oil prices and long lines at gas stations.
Hillary Clinton specifically referenced independence from the Middle East two separate times when she claimed the United States is now energy independent.
You know that we are now for the first time ever energy-independent. We are not dependent upon the Middle East. But the Middle East still controls a lot of the prices. So the price of oil has been way down. And that has had a damaging effect on a lot of the oil companies, right? . . . We’ve got to remain energy-independent. It gives us much more power and freedom than to be worried about what goes on in the Middle East. We have enough worries over there without having to worry about that.
While the United States oil sector might not be strictly independent, it’s true that OPEC and the Middle East have less influence on the global oil market than ever before. In a recent essay for Horizons magazine, Columbia University Professor and Center on Global Energy Policy founder Jason Bordoff dissected America’s pursuit of energy independence in an increasingly energy interdependent world, and argued OPEC no longer holds sway over the oil market like it used to.
While there is disagreement about OPEC’s effectiveness in managing oil prices, its physical ability to do so has been gradually declining. “OPEC began to lose its grip on oil prices after 2003, as its spare capacity dwindled and prices embarked on a steady and strong upward climb,” explains Robert McNally in his 2015 policy paper “Commentary: Welcome Back to Boom-Bust Oil Prices.” As oil prices began to slide in 2014, OPEC was unable or unwilling to curtail production to support prices, refusing to do so for the next two years in the face of stubbornly low prices. . . In the face of severe domestic fiscal pressures resulting from low prices, a changed geopolitical landscape as Iranian production returned postsanctions, and longer expectations of global over-supply, OPEC in September 2016 announced a deal to cut output. Yet details remain to be worked out on how the cuts will be implemented across countries, so it is too early to tell whether OPEC will be able to reassert its ability to manage the oil market.
Bordoff argues that OPEC’s power over the global oil market hasn’t diminished due to greater U.S. energy independence, but rather from greater interdependence. His essay (which I highly recommend) lays out a strong argument for why the United States should embrace interdependence and cast off the idea of energy independence to ensure U.S. energy security going forward.
Since its emergence in the wake of the 1970s energy crisis, an overriding preoccupation with import reliance and the chimera of “energy independence” have shaped modern energy policy in the United States. Yet the energy landscape has shifted profoundly since then. Climate change has emerged as an existential global threat; deep and liquid commodity markets have developed; energy trade has become more global and integrated; the shale revolution has transformed America’s supply outlook; the influence of OPEC on world oil markets has waned; and new technologies are fundamentally altering the way we use and manage energy, creating new opportunities and risks.
In response to these shifts, the goals of American energy policy also need to evolve. Energy security comes from being interconnected, not disconnected. The nature of the climate threat means isolation is not an option, and urgency requires that climate considerations be integrated throughout policy. The shale revolution and changing role of OPEC mean increasingly frequent cycles of boom and bust that create more interdependence between producers and consumers.
Hillary Clinton might not be strictly correct in saying that the United States is energy independent, but it is true that the United States is more resilient to external pressures on the U.S. oil supply than ever before — thanks to energy interdependence, not independence.