One Weird Trick To Achieving American Energy Dominance

The term “American energy independence” has long been used to discuss the strategic need for the US to provide for its own energy (mostly oil) and not be reliant on foreign sources. The current administration has even stepped up the rhetoric by expanding the sentiment to that of “American energy dominance”. While decades of technology investment and ingenuity have propelled the US to the #1 producer of crude oil, recent events in the global oil market have shown us just how much at the mercy of others we still are.

If we really want to achieve energy independence and/or dominance, there really is one thing that we should do as a nation: electrify the transportation sector.

Of the major sources of US energy, the majority are used for making electricity, making heat, or moving us and our stuff around. The fuels that we use to make electricity and heat (natural gas, coal, uranium, and renewables) are essentially all domestically produced, with some natural gas imports and exports with Canada.  

However, the majority fuel we use in the transportation sector is oil (petroleum). The price and supply of oil is still tied to a global market for which, even though we are now the #1 producer, we do not have the dominance that we enjoy in the other fuels. Thus, when the global oil markets are turbulent, we feel the waves too.

There are two major things driving volatility in today’s oil market. COVID-19 and the social distancing measures we have put into place to stop the spread have decimated demand for oil. At the same time, an oil price war between Russia and Saudi Arabia, which appears to be easing, has significantly increased the supply of oil. All else equal, each of these events would reduce the price of oil, but together, they have cratered it.  

Low energy prices are generally seen as good for the economy, because they allow us to spend less on transportation and more on other things. This was even more true for the US economy when we were net importers of oil. However, in the lasts 15 years, advancements in non-conventional (fracking) oil production have driven the US to become a net exporter of petroleum products for the first time in many decades.

But too low of oil prices now also cause us economic pain because the price of oil in the US is tied to a world market, and lower global oil prices mean that domestic producers and those they employ suffer. To add insult to injury, consumers cannot enjoy lower prices right now as we are not traveling and millions of us are no longer commuting to lost jobs. Also, current lower prices can result in future higher prices, because companies do not have cash to invent in the future.

But electrification would move the US transportation sector away from one that is at the mercy of world markets that can be manipulated by hostile powers towards one that relies almost 100% on US sources of energy. It would even spur investments and jobs in US energy infrastructure as the grid, which could handle the transition, evolved to power the transportation sector.

The current coronavirus-driven reduction in travel has also given us a picture of what an electrified future could include: cities with clean, breathable air. While the reason is terrible, the lesson is there to learn just the same. We can still have the mobility we want while enjoying the air we breathe.

Some aspects of transportation, like passenger vehicles and trains, are easy to electrify, and others, like air travel, are harder. But enacting policies to speed the electrification of the transportation sector are also policies that hasten American energy independence and dominance.