Benefits of Drilling for American Oil

During the oil spike of 2007-08, energy independence returned to the forefront of American politics for the first time since the 1973 oil embargo. One of the critical differences between the United States and other industrialized countries such as Japan or Germany is the U.S. sits upon substantial oil deposits. Six decades ago, the U.S. was a net exporter of oil. While even maximum exploitation of American oil resources could never meet the country's huge demand, there are some benefits to be had in relying more on domestic resources.

Consumption Statistics

The U.S. imports 13.15 million barrels of oil a day. Including running its vehicles, roughly 40 percent of the energy produced in the U.S. comes from burning petroleum products. Two-thirds of that petroleum is imported from foreign sources. According to the Energy Information Association, since 1973, the time of the OPEC-sponsored embargo, the U.S. has grown from importing 35 percent of its oil to 60 percent by 2006. Therefore, the U.S. has become nearly twice as dependent on foreign oil imports since the time of the first major wake-up call to the country's vulnerability to difficulties in the international oil market.

Production Statistics

U.S. domestic oil production has been in general decline since the collapse in oil prices in the mid-1980s. This is not because of any lack of domestic resources but because it is more economical to import oil than to exploit domestic oil reserves. But that is changing. According to the EIA, total domestic output was 4.96 million barrels a day in 2008 and is expected to rise to an average of 5.2 million barrels for 2009. Untapped reserves in the U.S. are estimated to be roughly 5.5 million barrels. While this is substantial, a switch to 100 percent reliance on domestic oil production would consume the entire U.S. oil reserve in little more than a year.

Energy Security

Assuming the growth oil consumption in the U.S. remains stagnant, any increase in domestic production would result in a corresponding decrease in dependency. It is important to note that under normal circumstances, this would have no impact on oil prices in an energy crisis. Oil, including that from the U.S., is traded as a commodity on international markets. Regardless of how much oil is produced at home, a shock in the oil market would cause price spikes at the neighborhood gas pumps. What it would do is provide a margin of safety in the event of a major event such as a repeat of the 1973 oil embargo. Any shock in the oil market would hurt the American economy, but greater energy security can prevent it from causing the economy to grind to a halt because of a lack of oil.

Improved Balance of Trade

U.S. trade statistics indicated that in 2006, the country ran a trade deficit of $817.3 billion. Roughly $240 billion of that was comprised of oil imports. Every 500,000 barrels a day of oil the U.S. produces domestically translates into slashing $11.8 billion off the trade deficit. American industry and consumers would still buy the oil, but the money would go back into the American economy and not to countries such as Saudi Arabia, Kuwait, Russia, Venezuela or Nigeria.

More Jobs

Expanding American oil exploitation would also mean the creation of jobs. In the short term, this creates drilling jobs and in the middle term, it creates oil rig jobs. The pay depends on the skill requirements of the position, but industry surveys indicate an experienced rig worker receives more than $100,000 per year.