How Much Can We Expect the Rise in U.S. Domestic Energy Production to Suppress Net Energy Imports?

Abstract

A reason commonly stated by policymakers in the United States for increasing domestic energy production is to reduce energy imports. However, the degree to which domestic production actually displaces imports is an open question. To help provide an answer to this question, I analyze data for the United States from 1960 to 2011 to assess how many units of imported energy are suppressed by each unit of domestic production, controlling for economic activity and energy prices. I show that the pattern is one where domestic energy production spurs energy use, so that the effect of production on net imports is less than one-for-one. This finding has important implications, which I discuss, about the ease with which reliance on foreign energy sources can be overcome and about the environmental consequences of rising domestic production.