Unconventional Energy and U.S. National Security

U.S. energy production has expanded dramatically over the last five years. So has the potential for this resource to bolster and advance economic and national security interests.

After decades of declining onshore energy production, independent oil and gas companies have recently delivered astonishing increases in output. These are largely due to the development and deployment of sophisticated unconventional drilling techniques in shale rock formations. According to the Energy Information Administration (EIA) oil production has increased by 50%, natural gas by 22%, and natural gas liquids critical for petrochemical production by 41%, in the last five years. These dramatic increases have helped to stabilize or drop energy prices, an important driver of the recent renaissance in U.S. manufacturing. Energy imports are also at the lowest level they have been in the past 20 years, while U.S. reserves in the ground jumped by 37% for oil and 41% for gas from 2008 to 2011 (the most recent year for which there is official data), according to EIA.

The U.S. balance of payments deficit contracted by $168 billion between 2008 and 2012, according to the Foreign Trade Division of the U.S. Census Bureau, a welcome trend strengthening American economic recovery. The United States is increasingly competitive in energy-intensive industrial manufacturing, and the outlook is very strong for investment and job-growth in this sector.

These economic changes have important implications for U.S. energy and national security. Though the United States needs less oil from abroad, the U.S. economy is hardly immune from shifts in dynamic and volatile global oil markets. Trade relationships with traditional U.S. foreign oil suppliers are changing, but the United States must ensure that declining energy trade ties do not lead to a declining level of political and security engagement with these key foreign partners.

The current abundance of U.S. oil and gas represents a resource policymakers in Washington can tap to make the U.S. economy more competitive, resilient, and more effective in promoting our foreign policy aims. U.S. leaders should encourage continued unconventional production to help keep global energy markets well-supplied. At present, shale resources are contributing to relatively stable conventional energy prices. Policymakers should seize this propitious moment to take steps to increase energy efficiency and to diversify supply sources. Through these steps, policy leaders can use the newly-abundant shale energy as a resource to expand foreign policy leverage and promote national security interests.

The findings and recommendations above are the results of a new report by the Center for a New American Security’s Task Force on Unconventional Energy and U.S. National Security. Written by me and released today, the report examines the implications of the shale energy boom for our nation’s economic and political interests and policy options for tapping this resource to advance national security. It summarizes some of the central issues discussed over the last year in the working group sessions of the Task Force, which was co-chaired by Ambassador Paula Dobriansky, Governor Bill Richardson and Senator John Warner.

[Note: the views and recommendations expressed in the report are those of the author alone.]

Several of the report’s key policy recommendations for executive branch and congressional leaders are summarized below:

• Conduct a strategic review of current threats to physical oil supply, as well as U.S. strategic and military commitments to guarantee oil transit through key maritime choke points and conflict-prone areas.

• Pursue greater collaboration with energy partners abroad to guard against threats to energy infrastructure and supply routes posed by physical or cyber attack, and conflict- or weather-related disruptions.

• Strengthen international cooperation with major energy producer countries to help ensure that global energy markets are well-supplied.

• Promote the development of domestic unconventional production, and of unconventional energy production abroad, to help keep global energy markets well-supplied.

• Revise coordination mechanisms with major global energy market players, particularly the largest consumer countries, to better manage market supply disruptions.

• Increase U.S. energy efficiency, and diversification of energy supply sources, to make our nation’s economy more resilient and reduce its exposure to oil market disruptions when they occur.

• Build on the economic benefits of the shale boom by facilitating and incentivizing domestic development of energy-intensive manufacturing.

• Encourage and facilitate exports of natural gas and crude oil to stimulate U.S. energy production and contribute to more efficient and well-supplied global energy markets.

The United States has a tremendous opportunity to put its new unconventional energy supply into the service of strong U.S. leadership at home and abroad in the years to come. Policy should advance U.S. interests and should build U.S. energy security and economic resiliency to weather the complex and volatile global energy market.

Unconventional Energy and U.S. National Security Task Force