Declaration of Not-So-Much Dependence

There’s been much discussion lately of how alternative energy sources like wind and solar power could lower the U.S.’s dependence on foreign oil. What’s often overlooked, though, is just how much this country is already meeting its energy needs with domestically produced oil and natural gas.

Net Oil and Natural Gas Import Dependence

Source: D.A. Davidson & Co. presentation, "Engineering & Construction Recovery Underway: Identifying the Drivers & Beneficiaries,” 4/1/2013. Graph indicates net natural gas imports or exports in major energy-consumption markets for 2010 and projected for 2035, charted against

net oil imports for 2010 and projected for 2035.

As this graph shows, the U.S. has a significant advantage in its production of both oil and natural gas. The yellow squares indicate each market’s recent proportions of energy importation. The U.S. compared very favorably with other markets, with relatively low levels of importation of both commodities. That might come as a surprise to those under the impression that the U.S. is unusually dependent on foreign oil.

A more dramatic story is told by the red squares. They indicate the projected levels of importation of oil and gas in these same markets in 2035. The arrows drawn between the squares indicate whether each market’s dependence on imports is expected to increase or decrease.

Every economy shown here, save one, is projected to import a higher percentage of its oil and natural gas. That exception is the U.S., which by 2035 is expected to import significantly less oil, and to actually export natural gas.

The implications of relative energy independence are significant: not just lower fuel costs, but also less exposure to the price volatility and geopolitically-driven supply disruptions that can accompany energy imports.

All these factors bode well for long-term growth not only among energy companies, but in a variety of industries. Chemical companies in the U.S., for example, could have a huge advantage over their foreign competition, as they often use natural gas as a feedstock in their production processes. Firms involved in building out and maintaining the infrastructure that transports oil and natural gas could see demand for their services rise in a sustained fashion. Virtually any manufacturer requiring significant amounts of energy for their processes, facilities, and equipment could benefit from this nation’s relative independence from foreign sourcing.

This potential tailwind for U.S. industry bears watching.

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© Heartland Advisors

© Heartland Advisors

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