The United States in recent years has stunned the globe by becoming the world’s biggest oil producer, a remarkable about-face for a country that a decade ago reeled from reliance on pricey imported crude. So why does it seem so hard to translate that so-called energy dominance from rhetoric into reality?
President Donald Trump’s tweet-borne rage with the oil-price rollercoaster in recent months, and OPEC’s subsequent efforts to fix the market by adjusting the amount of oil it pumps, illustrates the frustration many in Washington feel when they see what looks like a huge U.S. energy boom failing to deliver on promises of dominance or independence.
But the reality is that the notion of energy dominance, as repeatedly trumpeted by the administration, is at heart a hollow idea. Even America’s position as the top producer in the world isn’t enough to shield it from rising prices, free it from Middle East entanglements, strangle foes with sanctions, or even give it many additional foreign-policy tools.
The ultimate irony is that what created the U.S. energy revolution—nimble, private-sector companies using new technologies to extract previously untapped crude—keeps the United States from wielding its energy strength in the way that Saudi Arabia, Russia, and other big producers with state-owned firms willing to put geopolitics above profits do.
“Ironically, the precise strength of the U.S. energy sector—that it is driven by the market and not by a government—also means that it is not a stick to beat people with,” said Bruce Jones, the director of the foreign-policy program at the Brookings Institution.
Nobody can deny the historic size and speed of America’s transformation from energy importer to major producer and exporter in its own right. The United States currently produces 11.4 million barrels per day, with forecasts of more than 12 million barrels a day next year. Since the beginning of the shale boom a decade ago, the United States has essentially discovered the resource equivalent of another Iran and a Kuwait trapped in Texas and North Dakota shale formations.
“It’s a stunning turnaround, and it has enormous benefits economically and to some extent geopolitically,” said Jason Bordoff, the director of Columbia University’s Center on Global Energy Policy.
The economic benefits, at least, are a little clearer. By producing more oil and importing less from abroad, the energy boom helps U.S. GDP by keeping dollars at home. And it helps shrink the trade deficit—a dividend of about $250 billion compared to where the United States would have been without the shale boom, according to a new study from the consultancy IHS Markit.
At the same time, all those extra barrels of American oil sloshing around, even if they aren’t physically exported, keep the world as a whole better supplied, meaning that nasty geopolitical surprises cause fewer price spikes than in years past. Jones called U.S. production an “important shock absorber” for the global economy.
And there are some foreign-policy benefits to newfound U.S. energy dominance, if not quite the bonanza many boosters seem to still expect. U.S. natural gas production and exports have limited Russia’s ability to gouge customers among U.S. allies in Europe, even if Moscow is still increasing its market share there. And the fact that the United States produces and even exports record amounts of oil gives it a different way to engage with neighbors such as Mexico, which once feared American designs on its black gold.