This is the beginning of a pivotal year for the U.S. economy. After five years of contraction followed by a fragile recovery, we are now returning to stability and growth. During this period no part of our economy has changed more than energy.
When America went into the Great Recession, it was dependent on foreign oil to make the economy run. Now, we head into 2014 poised to be energy independent to an extent the United States has not been in over half a century.
Even as it struggled through the Great Recession, the United States became the world’s leading source of natural gas. It also made strides in other homegrown energy sources. For example, 30 percent of the new electric generating capacity installed last year was wind and solar.
Above all, we’ve begun to curb our addiction to foreign oil. In 2006 we depended on oil imports for 60 percent of our consumption. Today only 36 percent of our oil comes from abroad.
The U.S. controls its own energy destiny for the first time in a generation. As recently as 2008, when crude oil sold for $147 a barrel, we had to think in terms of scarcity and limitation. Now we can think about choices and options.
Today we have more ways to meet energy needs than ever before. On the supply side, America gets energy from diverse domestic sources. These options include oil, coal, natural gas, nuclear, wind, solar, geothermal, hydro, waste and biomass. On the demand side, the vehicles we drive are more efficient, advanced lighting is slashing electricity bills, and utility programs are helping customers find ways to use less energy and save money.
This market success did not just happen. Investment in advanced energy innovation and policy and regulatory changes at the federal, state and local level helped propel these results.
We need to continue these investments in energy innovation. Not all will pay off, but history shows that multiple investments lead to big returns. Natural gas surely did, becoming suddenly cheap and abundant, thanks to technological innovation. So did solar power. Thanks to falling costs and new financing models, solar is going up on thousands of homes and businesses not only in California and Arizona, but in Massachusetts, New Jersey, and North Carolina. We are cashing in today on multiple energy investments of the past.
Too often in the past, the activity and innovation launched by energy crises, starting with the OPEC oil embargo of the 1970s, have given way to laxity when things returned to “normal.” In energy today, there is no “normal,” only new challenges and new opportunities.
In making America smarter on energy, we’ve just scratched the surface. Hybrid, plug-in hybrid, and electric vehicles are reinvigorating the U.S. auto industry. These vehicle choices give motorists the opportunity to use less gasoline, or none at all. Tesla’s Model S was Motor Trend Car of the Year and Consumer Reports’ top-rated car in 2013.
Furthermore, the rest of the world needs what we’ve got. The latest BP Energy Outlook predicts that global energy demand will grow 41 percent by 2035. Nearly all of that growth is coming from emerging economies, with more than half of it from China and India. Meeting that demand will require every energy resource there is, as well as continued innovation to make the energy we use go farther.
The energy innovation that propelled our momentum to more energy independence has many benefits. We’re already seeing them. In November, the United States had its lowest monthly trade deficit in nearly four years, due in large part to a steep decline in value of imported oil. For the first 11 months of 2013, crude oil imports declined by nearly $40 billion, a drop of nearly 14 percent. Declining trade deficits translate into greater economic growth. This leads to growing companies, a larger tax base, and a smaller U.S. deficit.
In the midst of economic carnage and uneven recovery, America may have just discovered the Golden Goose in domestic energy. Let’s not waste it. Natural gas, sure. But we also need policies to promote wind, hydro, solar, and geothermal, as well as EVs, energy storage, microgrids, and energy management. Now is no time to get comfortable.
The opportunity is here. We need our best minds and most daring entrepreneurs focused on making our energy systems better and smarter. We must give them the support they need to succeed. This means fair treatment in the tax code, funding for R&D and support for deployment and adoption of the best technologies. Then, a future president just may announce at a State of the Union that the United States is the world’s biggest exporter of energy. Imagine that.
Richard is CEO of Advanced Energy Economy, a national business association.