WASHINGTON – For the first month in nearly two decades, the U.S. in October extracted more oil from the ground than it imported from abroad, marking an important milestone for a nation seeking to wean itself off foreign oil.
A promising sign for a still-slugging economy, the shift could foreshadow future opportunities to boost jobs in the U.S., lower the trade deficit and insulate the economy from foreign crises that can send oil prices rising. But it also speaks to deeper, underlying changes in the way Americans use oil, as price-conscious consumers seek to limit what they pay at the pump.
Not since 1995 has the U.S produced more crude oil than it imported. For several years now, domestic production has been on the rise while net imports have been declining. But data released Wednesday by the Energy Information Administration, the statistical wing of the Energy Department, show the trend lines have finally crossed, with crude oil production topping 7.7 million barrels per day.
Obama administration officials said President Barack Obama’s efforts to boost fuel efficiency for cars have been a driving factor, helping to reduce U.S. demand for gas and, in turn, lessening the need to import foreign oil. Officials said requiring auto companies to make cars that run on less gas has gone a long way toward realizing Obama’s goal of curbing global warming. They also credited the president with promoting drilling on federal lands and offshore as part of his strategy to encourage more U.S. energy production.
“Taken together, these factors not only reduce our dependence on foreign oil, but work to reduce overall carbon pollution in our communities,” said White House spokesman Jay Carney.
But on the production side, energy experts and the oil industry say the higher volumes of oil coming out of the ground come despite Obama’s policies, not because of them. They say Obama has made it harder, not easier, to produce oil on government land. After all, the U.S. still imports far more oil-based products like gas and diesel than it exports. As the world’s biggest oil consumer by far, the U.S. is still a long way from being energy-independent.
“It’s a very positive sign — enormously positive,” said Philip Verleger, an independent U.S. energy analyst. “But energy policy has not been a help, it’s been a hindrance.”
Although domestic oil production has been growing since Obama took office, most of the expanded production has been on private and state lands that the federal government doesn’t control. Oil analysts said high oil prices have made it lucrative for oil companies to invest in new wells, even as easy-to-drill areas become scarce and companies must resort to more expensive technologies to unearth oil in North Dakota and in deep-water wells in the Gulf of Mexico.
At the same time, the after-effects of the recession and high gas prices have left Americans looking for ways to cut costs — including by driving less and buying smaller cars. The resulting decline in consumption has meant the U.S. must buy less oil from the Middle East and elsewhere to meet its needs.
In the first month of his presidency, Obama started putting into effect fuel efficiency standards that his predecessor, President George W. Bush, had signed but declined to implement.
And broader societal trends may be in play, too. Amy Myers Jaffe, an energy policy expert at the University of California, Davis, said as more baby boomers enter retirement, they’re driving less and using less gas. They’re being replaced in the marketplace by people who came of age in a time of cost-cutting and environmental awareness and are more likely to use a car-sharing service like Zipcar than to shell out tens of thousands for a vehicle of their own.
“They’re living a different kind of lifestyle, and a lot of it is a non-car lifestyle,” Jaffe said.
For Obama, a major second-term drive to combat climate change has been juxtaposed against an economic imperative to encourage the development of American energy resources. Oil is bought and sold on the global market, so upping domestic production is unlikely to increase how much oil is burned planet-wide. But it does make it more difficult for Obama to meet his goals of lowering U.S. emissions of heat-trapping greenhouse gases.
On the other hand, it means more American jobs removing the oil from the ground.
The October figures will be revised in the coming months as more final data becomes available. But based on the size of the gap between net imports and production — 170,000 barrels per day — administration officials said they were confident the trend will hold true.
Oil industry advocates said they hoped the shift would encourage the administration to do more to ramp production on federal lands, now that the vision of a U.S. that can rely more heavily on its own energy resources is coming into view.
“For most of our history, it’s been scarcity,” said John Felmy, the chief economist for the American Petroleum Institute. “It’s completely changed.”
Photo courtesy Texas Energy Museum.