America's New Deal for Global Energy Mix
In 1973, Richard Nixon, in the teeth of the Arab oil embargo, pledged that the U.S. would achieve energy independence within seven years. Like his presidency, that didn't quite work out. Net imports provided 35% of U.S. oil in 1973. Seven years later, they supplied 37%, and by 2005, 60%.</br></br>Now, that trend is reversing fast. In the 12 months ended in August, net imports met just 46% of oil demand. Similarly, net imports of natural gas climbed from 4% of consumption in 1973 to a peak of more than 16% in 2007, but were back under 9% in the year ended in August.</br></br>This isn't energy independence. But just as America's growing energy-import dependence in the 1970s had implications of global proportions, so will this reversal four decades later.</br></br>In natural gas, the opening of shale resources has caused excess supply and cratered prices. Despite calls to use more natural gas, demand hasn't caught up. That is why the likes of Cheniere Energy now want to liquefy and export natural gas to cash in on the spread between low U.S. prices and much higher European and Asian ones.</br></br>Capturing the benefit of this price difference will be a central battle in the natural-gas market over the next decade. Exports of natural gas would tighten domestic supply, raising prices. That is risky politically. Michael Levi at the Council on Foreign Relations reckons those benefiting from the natural-gas glut--mainly utilities, petrochemical companies and heating consumers--are more organized politically than natural-gas producers and exporters. The argument that gas should be exported not in its raw form but as an input to American-made goods will be tough to ignore.