Is the US Quietly Weaning Itself Off Foreign Oil?

Supply and demand. Working just like classical economic theory says it should.

Higher energy prices made it more economical to drill for oil in more challenging, therefore more expensive places. Those same higher prices led auto companies to improve gas mileage and even offer hybrid or electric cars, resulting in a lessening demand gas.

So we are simultaneously increasing supply and reducing demand, both of which independently cause prices to decline. And since domestic oil is generally cheaper than foreign due to transportation costs (one significant element of which is energy costs), US demand for foreign oil may decline, though not disappear in the future.

That this makes geopolitical sense, given who owns most of the imported oil and where the profits go, is an added bonus. Whether this is an anomaly or becomes a trend remains to be seen. The larger point may be that the US can do this if it wants to, without cataclysmic damage to the economy. JL

Jordan Weissmann reports in The Atlantic:

The United States isn't breaking its reliance on foreign oil any time in the near future, but over the next couple of decades, we will be importing much less oil for two simple reasons. We're drilling more crude, and we're driving more efficient cars.
In 2010, the United States imported 49% of its petroleum supplies. By 2035, the country will be importing just 36%, according to the U.S. Energy Information Administration's 2012 Annual Energy Outlook.

While it's always healthy to be skeptical of long-term economic predictions, there are few positive trends pointing to a decrease in oil imports. Onshore oil production is expected to continue its boom, from 5.5 million barrels of oil a day in 2010 up to 6.7 million in 2020. It's predicted to drop after then, settling around 6.1 million in 2035. Both those production figures are higher than the EIA's previous estimates. On top of the extra domestic oil, the EIA says we'll be using the equivalent of an additional million barrels a day of biofuels, further cutting our need for imports.

Meanwhile, fuel efficiency standards for cars and trucks are scheduled to tick up to 35.4 miles per gallon by 2016, which will keep the demand for gas and other transport fuel relatively in check, growing at a slight 0.2% year. The Obama administration has proposed even tighter standards that would require car makers' to increase their fleet average to 54.5 by 2025. If they go into effect, they'll help reduce American demand for gas even more.

If all goes well, and the U.S. can keep its thirst for fuel in check, we'll naturally begin to wean ourselves off foreign oil. A bit, at least. We're still looking at millions of imported barrels a day. So don't start having any fantasies of energy independence yet.