Here in the United States, we’ve always depended on other nations for energy sources.
And we’re not in a unique situation. Nearly every country imports some form of energy…
Italy, for example, has no nuclear power plants of its own; it imports nuclear power from France. And Russia — a major exporter and producer of oil and natural gas — also imports both resources.
But the U.S. is dependent on imports for nearly all of its power sources.
In 2010 the U.S. was the world’s fourth largest importer of electricity. We import oil, natural gas, even coal, and though we have plenty of our own nuclear power plants, we import over 90% of the uranium used to power them.
In fact, we have always been at the mercy of other nations for our energy supply.
If they were to cut us off, what would we do?
The topic of improving our domestic energy supply was addressed at the presidential town hall debate this week, with each candidate aiming to prove that his “all-of-the-above” strategy was more “all-of-the-above” than the other’s.
And while it turned into more of an accusatory grudge match, the energy-related portion did highlight what is important: domestic production versus imports.
Natural Gas vs. Coal
Right now, the two biggest sources for domestic power generation are natural gas and coal.
In 2007 49% of our electricity was from coal plants while 22% was from natural gas.
Though we produce both of these resources, we’ve also historically imported a large amount of both. And both industries have seen a shift in the last few years, as domestic natural gas production has ramped up with the shale boom and price per mmBtu has fallen below that of coal…
In 2011 coal had fallen to 42% of generation and natural gas rose to 25%. By the end of this year, the EIA expects this to shift even further — to 37% and 30%, respectively.
Of course, this will be affected by what happens to the price of each. If natural gas becomes significantly more expensive than coal (something high demand from a chilly winter could cause), coal consumption could increase again.
Since we’ve been consuming less coal, our exports have been increasing. We’re shipping what we’ve stopped using to countries in Asia and Europe and to Canada and Brazil.
In fact, U.S. coal exports have nearly doubled in the last five years, from 59.2 million short tons (Mst) in 2007 to 107.3 Mst last year.
But as we ramped up exports, imports fell during that time by well more than half…
In 2007 we were importing 36.3 million short tons of coal; last year we imported just 13.1 Mst.
With natural gas, we’re seeing a similar trend. Production has jumped in the last five years from a total 24.66 trillion cubic feet in 2007 to 28.58 trillion cubic feet last year — all while imports have been shrinking (we brought in 3.46 trillion cubic feet last year, down from 4.61 trillion in 2007).
Most of these were pipeline imports from Canada, though they also significantly dropped from Egypt, Nigeria, Trinidad, and Mexico.
Playing the Sweet Spot
So we are starting to reduce our foreign imports — and the domestic shale boom has played a significant role in that.
There has been enough of the resource to cut our dependence on coal, help us export more coal, and even reduce natural gas imports while increasing its share of generation.
The next step is reducing our OPEC dependence.
And we’ve also started to do just that — courtesy of the domestic shale boom…
Oil imports are down from 13.4 million barrels per day in 2007 to 10.8 million barrels per day last year. Meanwhile, production is up to 6.22 million barrels per day from 5.07 million during the same period.
It’s no secret the shale boom is behind our growing reliance on our own resources for energy.
And it’s no secret it will forge on and continue to bring us profitable resources, no matter who’s sitting in the Oval Office next year…
What isn’t as widely known — at least, not yet — is how to best play this boom that shows no signs of losing momentum.
Good Investing,
Brianna Panzica
for Energy and Capital
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