In 1973, President Nixon said U.S. energy independence would become a reality within 10 years -- a promise that clearly didn't pan out.

But 40 years later, America is finally inching ever closer to energy independence. Last month, we produced more oil than we imported for the first time since early 1995, marking a major milestone in reducing our dependence on foreign oil.

Surging production, stagnant demand
In October, U.S. oil output increased 11% year over year to average about 7.7 million barrels per day, while imports declined 5% year over year, coming in at 7.6 million barrels a day, according to data from the U.S. Energy Information Administration, or EIA. The trend of rising production and falling imports is no fluke, either; it probably represents a structural shift toward higher domestic production and falling demand.

Since 2008, U.S. crude oil production has surged 50%, while oil imports have declined 20%. On the supply side, the surge in production has been driven largely by shale drilling in fields such as North Dakota's Bakken and Texas' Eagle Ford, where improvements in drilling techniques such as hydraulic fracturing and horizontal drilling continue to boost output.

On the demand side, U.S. oil consumption has been more or less unchanged over the past five years, reversing a multi-decade trend of rising consumption. A weaker economy, growing competition from natural gas, and improving fuel efficiency for new vehicles are the main reasons behind stagnant U.S. oil demand, as Fool contributor Adam Levine-Weinberg recently noted.

The combination of these supply and demand trends suggests energy independence may not be the distant pipe dream it was just a decade ago. Even if it doesn't arrive as early as 2020, as Citigroup has suggested it will, or 2035, as the International Energy Agency forecasts, the nation is clearly becoming less dependent on foreign oil.

Impact on U.S. refiners
As a result of surging production, U.S. refiners are operating near full capacity to meet strong global demand for refined products, even as oil majors including ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX), and Royal Dutch Shell (NYSE:RDS-A) cited global refining overcapacity as one of the main reasons for lower third-quarter profits.

Many have drastically reduced their reliance on foreign oil, as they boost access to cheap domestic supplies. Earlier this year, Valero (NYSE:VLO) announced that it had entirely replaced its light oil imports with domestically produced crude at its Gulf Coast and Memphis refineries, while Phillips 66 (NYSE:PSX) is constructing a new rail offloading facility at its Bayway refinery in New Jersey that will be able to receive as many as 75,000 barrels per day of Bakken crude by the second half of next year.

Reliance on certain suppliers still high
However, while these developments are certainly encouraging, it's important to keep things in perspective. First, we're still importing 35% of the petroleum we use, roughly the same share as in 1973, when Nixon promised energy independence. And while imports have fallen dramatically in recent years, America's reliance on just a handful of countries is actually increasing.

Last year, the share of U.S. oil imports from its top five suppliers -- Canada, Iraq, Mexico, Saudi Arabia, and Venezuela -- increased to the highest level in 15 years, as Canadian imports surged 8% year over year to a record 2.4 million barrels per day, while Saudi imports rose 14% to 1.4 million barrels a day.

Risks to continued production growth
Second, as the EIA itself has noted, shale oil development is still in a relatively early stage, which makes the outlook for continued production growth highly uncertain. Not only does the technique of hydraulic fracturing, which has been key to unlocking the nation's bounty of shale oil and gas, face environmental challenges because of its production of copious amounts of carbon dioxide and wastewater, but it also faces major economic challenges.

These include the relatively high breakeven costs and depletion rates for shale wells, which leaves continued shale development highly vulnerable to a sustained collapse in oil prices. So while America is making commendable progress toward energy independence, we're probably still a couple of decades away, and there are still a host of risks and uncertainties that could prolong the amount of time it'll take us to get there.

Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.