US dependence on imported crude oil is expected to drop to 41% this year, but it could drop even faster, and even to zero, says Adam Sieminski, Administrator of the Energy Information Administration.
EIA’s forecast is a substantial reduction even from 2011, when imports met 45% of US demand, and way below the record year of 2005 when the US imported 60%. Analysts agree that discoveries of new US resources, improvements in US auto fuel economy, and lower overall demand due to the recession have combined to reduce the need for imports.
The EIA’s official outlook foresees imports dropping to 37% of US demand by 2035. But, Sieminski recently told the National Capitol Area Chapter of the US Association of Energy Economists in Washington, “It wouldn’t take a lot of pushing for the US to import no oil.”
Sieminski, who served for many years as chief energy economist at Deutsche Bank, said he’d personally tested out economic models of what could happen if the US changed three factors.
It wouldn’t take a lot of pushing for the US to import no oil.”
First, auto efficiency – or CAFE – standards were ratcheted up more quickly than currently planned so the auto fleet would average more miles per gallon.
Second, trucks that now use diesel fuel all were switched to natural gas, including liquefied natural gas for long-haul trucking.
With improvements in engine design and efficiency, and low natural gas prices, both changes are economically feasible and happening to some extent.
Third, Sieminski said he assumed that production of oil from shales continues to outpace predictions, increasing US supply above current expectations. He pointed to the “unbelievable” output producers are getting from wells in North Dakota’s Bakken Shale and Texas’ Eagle Ford Shale, output unanticipated less than five years ago.
Imports Could Plummet
With changes in those factors, he said, his calculations showed that, by 2035, the US could be importing just 14% of its oil.
Change a few other factors in the equation, Sieminski said, and the US could even look at ending imports.
Using only domestic crude oil to make refined products like gasoline and heating oil has been a goal since Richard Nixon was President. But Sieminski cautioned that actual oil independence would raise a host of strategic questions for the US.
Not least would be whether to maintain the Strategic Petroleum Reserve, which now stands at about 695 million barrels of crude oil.
The International Energy Agency requires countries to hold reserves proportional to their import dependency, so a supply disruption or embargo cannot disrupt economies the way the OPEC embargo did in the 1970s. If the US imported no oil, it would not be required to hold a reserve, Sieminski said.
But there might be other strategic reasons to maintain a reserve, and those would require substantial study, he said.