The International Energy Agency (IEA) claims in their World Energy Outlook that it is now technically possible for the United States to become energy independent by 2020. But that’s not their primary message. IEA is also warning that any independence will be short lived, and that message has been lost on most analysts.

IEA is an international organization based in France, which works to ensure reliable, affordable and clean energy for its 28 member countries, including the United States. It is not to be confused with the Energy Information Administration (EIA), which is a different organization that is nestled within the US Department of Energy (DOE). The IEA is not the EIA. But both organizations have credibility. Both organizations provide analysts with primary sources of information about energy, particularly about consumption data.

Nevertheless, forecasts from either organization are not fact and they usually come with a long list of assumptions. It’s no different with IEA’s World Energy Outlook and their forecasts of energy independence. Their assumptions, when taken together, have a high likelihood of providing analysts with false positives. In fact, the IEA states they believe it is unlikely that the US will actually reach complete energy independence.

To put the energy question into perspective, the US is already energy independent in several sectors. According to DOE’s EIA, the nation depends on six primary fuels: Coal, natural gas, renewable energy, energy efficiency, nuclear and petroleum. All those primary fuels have been used to create the nation’s only secondary fuel, electricity.

Looking at each fuel separately, the US is already in a strong position. For example, the US has always been a net exporter of coal. According to DOE’s EIA, the US is currently exporting approximately 66 million short tons of coal per year to countries like:

  • China 7.6 million tons
  • Netherlands 6.7 million tons
  • United Kingdom 5.4 million tons
  • Italy 5.0 million tons
  • South Korea 4.3 million tons
  • Brazil 4.1 million tons
  • Canada 3.2 million tons
  • Turkey 3.1 million tons
  • Japan 2.9 million tons
  • Germany 2.6 million tons
  • Morocco 2.0 million tons
  • Belgium 1.7 million tons
  • Mexico 1.7 million tons

When it comes to coal, the US is a net exporter and it is already energy independent.

Another example is natural gas. Currently, the US can produce more natural gas than it consumes. There are economic incentives to mimic the coal industry and begin exporting surplus natural gas. Cheniere Energy Partners’ new natural gas export terminal is scheduled to go online in 2017 and it will join ConocoPhillips’s export facility, which has been exporting natural gas from Alaska since 1969. The US is on autopilot to become a net exporter of natural gas. So when it comes to natural gas and coal, the US is already energy independent.

By definition, solar, wind and most other forms of renewable energy are also energy independent. So is energy efficiency. Yes, energy efficiency is a tradable commodity. There are energy markets emerging where energy efficiency commodities are traded as if they were electric power. New businesses, such as EnerNOC, Comverge, and subsidiaries of Exelon have already been formed to buy and sell negawatts and negawatt-hours, the opposite of megawatts and megawatt-hours. When it comes to coal, natural gas, renewable energy and energy efficiency, the US is already energy independent.

That leaves nuclear fuels and petroleum. And the big surprise is the US is not energy independent with respect to nuclear fuels.

Nuclear fuels are used by the nation’s commercial nuclear power plants to produce electric power. According to DOE’s EIA, only nine percent of the fuel delivered to nuclear utilities in 2011 was US-origin uranium. Australian-origin and Canadian-origin uranium together accounted for 31 percent of the 55 million pounds imported to the US. Uranium originating in Kazakhstan, Russia and Uzbekistan accounted for 40 percent. The remaining originated from Brazil, China, Malawi, Namibia, Niger, South Africa, and Ukraine.

Approximately 20 percent of the nation’s electricity originates from commercial nuclear power plants. Approximately 91 percent of the fuels used by those power plants are sourced from foreign nations. Combining the numbers reveals that approximately 18 percent of the nation’s electricity depends on foreign sources of nuclear fuel.

Adding to the surprise about the nation’s dependence on foreign sources of nuclear fuels is the lack of discussion about domestic production. There is little discussion about changing direction and seeking new opportunities for energy independent nuclear power plants.

The not-so-big surprise is that the US is a net importer of petroleum. But the political rhetoric has many Americans believing the US imports a majority of their oil from the Middle East. It’s simply not true.

In 2011, the US imported 4.2 billion barrels of oil. Only 679 million barrels or 16.2 percent came from the Persian Gulf. Approximately 2.5 billion barrels or 60 percent came was sourced from non-OPEC nations. Canada provided the US with 1 billion barrels, or 24 percent of all imported oil. Mexico provided 440 million barrels.

Some politicians and analysts have been confusing the energy independence issue by blending US data with North American data to make numbers more attractive. Nevertheless, domestic oil production has increased and domestic consumption has decreased. The net result is an apparent trajectory towards oil independence.

But that trajectory is an illusion. The bipartisan American Security Project (ASP) warns the real message behind IEA’s World Energy Outlook is a very different picture than most headlines suggest. It turns out most of IEA’s coverage of oil independence focused on a handful of the report’s nearly 700 pages. According to ASP, the majority of IEA’s report is a warning against unchecked exploitation of US oil. Specifically, IEA warns:

The United States’ ability to lead the world in oil production is realistically limited to between five and ten years at most.

In order to achieve production levels necessary to reach the status of number one oil producer, the US would have had to excavate almost all of its fossil fuel reserves by 2020.

Third, according to IEA’s main scenario, which assumes an amount of efficiency policy that is yet to be implemented, the US could still be consuming 5.5 million barrels per day more than it is producing in 2020, when the oil boom peaked.

The news that the US will become energy independent by 2017 is simply not a fact. For the US, energy independence is an unlikely goal. In fact, it could provide more harm than good. But the recent success in natural gas has the nation moving in the direction of independence and that achievement has benefitted the US economy.

At the time of publication, Glenn Williams had no position in any of the stocks mentioned.