The International Energy Agency recently confirmed what market watchers have been saying for a year: oil and gas production in the United States is surging and is expected to continue to rise. This trend has led a parade of analysts and even the government's National Intelligence Council to predict that, after four decades of failed attempts, America might soon become energy independent. This view, if taken too far, is not only wrong, it is dangerous. The United States would remain entangled with the global oil market indefinitely even if it were to import no oil. Political leaders lulled into a false sense of security by rising domestic oil and gas output run the risk of making big mistakes.
There is no doubt that oil and gas production in the United States is growing strongly, bringing with it important economic and security benefits. Indeed, it is entirely plausible that within 10 years or so, North America could produce as much oil as it consumes. (Canada and Mexico are typically grouped with the United States in oil analyses because the three markets are tightly integrated.) The resulting freedom from any need to import oil from overseas is what has led some analysts to herald a coming age of energy independence.
But this misreads our vulnerabilities. Since oil prices are set on world markets, we would not be immune from volatility elsewhere — unless the United States decided to wall itself off, an extreme measure that could inflict severe pain on the nation's allies. The United States economy is perpetually at risk because spikes in oil prices can quickly strip consumers of cash at the gas pump. This sudden "tax" can knock the economy on its back, regardless of where we buy oil.