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Net U.S. imports of energy in 2013 were at their lowest level in more than 20 years because of domestic oil and gas production from North Dakota and Texas. Policymakers say it's time to capitalize on those reserves, but the sustainability of the energy boom may present long-term risk.
The Energy Information Administration said the rate at which overall energy imports declined last year was faster than the previous year. At the same time, the rate of export growth slowed while crude oil production increased by 15 percent, the same pace for 2012.
North Dakota oil production in January increased 26 percent year-on-year to around 933,000 barrels per day. Analysis from Wood Mackenzie shows production from the Bakken and Three Forks reserve areas will average 1.1 million bpd in 2014 and reach 1.7 million bpd in 2020.
Last week, North Dakota Gov. Jack Dalrymple told delegates at an economic summit in Chicago that his state recorded the strongest personal income growth for any U.S. state. The national average was 2.6 percent growth while the state's average personal income increased 7.6 percent.
For Texas, EIA said oil production in January increased at the same rate year-on-year as North Dakota's, but reached 89 million bpd, the highest level since at least the 1980s.
The U.S. Department of Commerce said oil and gas extraction were the main contributors to earnings growth in states like North Dakota and Texas last year. Earnings growth rates in each of those states outpaced the national average not only in 2013, but in each of the four years since the onset of the recession.
A proposal outlined this week by House Budget Committee Chairman Paul Ryan puts U.S. oil and gas production at the center of a plan he says will help balance the federal budget. Rep. Doc Hastings, R-Wash., chairman of the House Natural Resources Committee, said the proposal capitalizes on what's already the second largest source of revenue for the U.S. Treasury.
"It prioritizes expanded American energy production and recognizes that new energy development is one of the best ways to raise new revenue, put Americans back to work, bolster the economy, lower gasoline prices, and create good-paying jobs," he said.
By next year, North Dakota and Texas oil production should help the national level reach 9.2 million bpd. That's nearly 10 percent more than the estimate for 2013, but 400,000 bpd less than the highest historical annual average of 9.6 million bpd set in 1970.
Former Federal Reserve Chairman Alan Greenspan warned of "irrational exuberance" before the so-called Dot-com bubble burst in the 1990s. By 2020, the International Energy Agency said Middle East oil producers will again dominate the global energy sector as the U.S. oil boom begins to fade. While President Obama's energy policy has its critics, an "all-of-the-above" policy may be the best bet to hedge.