Drilling Won’t Fix Our Trade Deficit
In a recent post on Forbes.com, contributor Tim Worstall put forth the dubious idea that we may be able to turn our trade deficit into a trade surplus through the exploitation of America’s fossil fuels. Drilling our way out of high gas prices and dependence on OPEC is popular in right wing circles, but the idea that we can restore our balance of trade with oil and gas takes the delusion to a new level. Worstall claims that “[i]t’s not inconceivable that the U.S. will start to run a sustained trade surplus for the first time in [his] adult lifetime.” There are certainly ways to make this happen, but short-sighted thinking and reliance on fossil fuels will not make this prediction a reality.
Oil imports currently account for approximately half of our nation’s $560 billion trade deficit. U.S. oil and gas production has increased recently with advances in drilling technology that have allowed us to access new sources of energy, but we are still net importers of both oil and natural gas. We are closing the gap between production and consumption in natural gas, but the disparity in oil is still much larger. The United States consumes 19,150,000 barrels of oil a day while currently producing only about 5.5 million barrels per day. Even with the new sources of oil, the U.S. Energy Information Administration estimates that we will only be producing 6.7 million barrels per day by 2020, while consumption is expected to rise.
It is clear that fossil fuel production will not save us in the short term, and depending on fossil fuels for our economic well-being in the future would be foolhardy. While we are learning to harness more of our available reserves, the world will inevitably move away from oil and gas. Many countries have set specific goals for the move away from fossil fuels. For instance, the European Union has set a target of obtaining 20 percent of its energy from renewable sources by 2020, up from the 9 percent it achieved in 2009. With power grids shifting to alternative energy sources and increasingly efficient cars and buses hitting the market regularly, the idea that oil and gas will be the area of energy production that is most profitable in the future is questionable.
Drilling our way to energy independence is partisan rhetoric, not a real solution to either our energy or economic problems. If we want to think about energy independence and the trade deficit, we should be concerned with things such as the fact that China is subsidizing its solar industry to undercut the pricing of our domestic manufacturers. Domestic fossil fuel production may make a dent in our trade deficit, but it will not eliminate it and a focus on drilling over innovation in renewable sources may hurt the United States long term. There are much better ways to fix our economy than pretending that we can drill our way to prosperity.