The new energy abundance in the United States has given President Trump a historic opportunity not just to expand the country’s economy at home, but also to expand its leadership globally. To maximize this opportunity, he should think about energy as more than a driver of economic growth, overcome the powerful political forces favoring isolationism and retrenchment, and rein in his tendency to alienate countries that should be energy allies of the United States.
The embrace of new technologies to extract oil and natural gas at an unprecedented rate has transformed one of America’s enduring vulnerabilities into a strategic asset. Thanks largely to fracking — hydraulic fracturing of rock — the United States is now the largest producer of oil and gas combined in the world. America consumes large quantities of energy, so this expanded production has not yet made the country energy independent. But it has greatly decreased its dependence on foreign energy: About a decade ago, the United States imported nearly two-thirds of the oil it consumed; that percentage is now closer to one-fifth. America is now the largest exporter of refined petroleum products and, in the past year, has also become an exporter of crude oil and liquefied natural gas.
The benefits of this surge in production go well beyond cheaper gasoline, an improved trade balance and a stronger economy. The boom has also improved the country’s sources of soft power, in part by underscoring America’s enduring edge in innovation and ingenuity.
The new output has forced changes in the structure of energy markets in ways that are favorable to the United States. American producers of oil from shale rock have introduced a new business model to the scene: Small investments in exploration and production can bring oil to the market quickly. This weakens OPEC, by making it more difficult for its production cuts to result in sustained increases in oil prices. For the first time in more than a century, the market determines the price of oil with much less influence from any cartel, commission or band of big oil companies.