Recommended Report on Domestic Energy Production

The Energy Security Leadership Council, led by a number of retired general officers of the U.S. armed forces and CEOs of corporations such as Fed-Ex, released this report on expected consequences of increased domestic energy production, particularly through increased drilling for oil and natural gas.  As the report emphasizes, a fundamental problem in the American debate over increased domestic production is the mistaken use of the term "energy independence" and the misunderstanding of what energy security really means.  Additionally, the authors present convincing evidence that the benefits of increased oil/gas supplies will be felt in a reduced trade deficit and increased employment.  However, expected benefits in the form of lower gasoline prices and reduced commitments to volatile geopolitical regions are shown to be quite mistaken.  The following conclusions of the report are worth reproducing:

"As U.S. levels of oil imports continue to fall, the trade deficit will improve, and the transfer of U.S. wealth abroad will decrease. This will help strengthen the dollar and increase investment in the domestic economy, where productive capital tends to have an extremely beneficial impact on growth.
 
Overall employment will benefit as well, with tens-of-thousands of new direct jobs in the oil and gas industry driving creation of many more indirect jobs throughout the economy. In short, the domestic oil industry could be a boon for the U.S. economy at a time when it is struggling to recover from the worst recession in 70 years.
 
But it is important to be clear-eyed about the effect the boom in oil production will have on American energy security. Rising domestic production will not shield consumers from oil price volatility, and it will not lower gasoline prices over the long term. It will also not allow the United States to abdicate its role in the Middle East.

America’s dependence on oil represents one of the most dangerous and pressing national security threats facing the country today. This threat, which is overwhelmingly a function of the importance of oil in the domestic economy, will not be substantially altered by rising levels of domestic oil production and falling imports.The fact is that as long as the United States remains dependent on oil as the primary fuel in our transportation sector, the nation will remain vulnerable to the effects of oil price volatility and debilitating price shocks. Critically, there is little the American policy apparatus can do to minimize the occurrence of volatility in oil prices, as it is primarily driven by events in dozens of consuming and producing countries around the world. The oil market is truly global in nature and scope.

In working to enhance American energy security, policymakers must set aside empty goals and
slogans, like energy independence, and focus on the hard work at hand: continuing to increase the efficiency of the automotive fleet through vehicle fuel-economy standards, investing in the research and development needed to commercialize advanced vehicle drivetrain technologies that greatly reduce or eliminate oil use, and supporting deployment of current-generation non-petroleum transportation fuels such as electricity and natural gas to diversify our energy sources. On all of these fronts, the United States has made some important, initial strides in recent years. With oil markets growing increasingly volatile based on continued demand growth in emerging markets and geopolitical instability in the Middle East, now is the time to redouble our commitment to those strategies. Today, as ever, dramatically reducing our consumption of oil is the surest path to national energy security."