Interestingly, the increased natural gas production has had its impact on trade flows through coal. That is, the additional natural gas production has largely been consumed domestically, partly at the expense of coal consumption for electrical power generation, so exports of coal also have increased rather sharply. Indeed, coal exports were up over 100% in 2012 compared to 2007.
All of these trends in US energy production and consumption have brought the US a little bit closer to energy independence, although energy independence is still not close at hand. Since it will be much more efficient to continue to import certain energy supplies, what is at stake is the US energy import/export gap, which certainly has narrowed considerably. Moreover, for geo-politics, it is the crude oil import-export balance that matters most. In terms of oil, the US is nowhere near the point where exports would equal imports. Domestic production would have to nearly double to achieve net import/export neutrality for crude oil, and that assumes continued declines in domestic oil consumption.
Bluford (Blu) Putnam has served as Managing Director and Chief Economist of CME Group since May 2011. This post was republished with permission from Indexology, a blog published by S&P Dow Jones Indices. The posts on the Indexology blog are opinions, not advice. Please read its disclaimers.