So what's responsible for the drop? For starters, the United States is producing more of its own crude. New drilling techniques such as hydraulic fracturing for shale have helped companies access "tight oil" in places like North Dakota and Texas. The EIA expects that to continue for the foreseeable future (though be wary of wild claims that the United States will soon surpass Saudi Arabia in oil production):
And the less-noticed flip side is that Americans are using less oil. Consumption of liquid fuels plummeted during the recession, and it isn't expected to rebound anytime soon. The EIA projects that Americans will be driving slightly more over the next few years as the economy recovers, but that will be offset by more-efficient vehicles and the retirement of older cars and trucks:
Combine those two trends together, and U.S. imports are falling rapidly. By 2014, the EIA expects the country to import just 32 percent of its oil, down from 60 percent in 2005.
Now, it's worth being clear about precisely what sorts of benefits this will bring. Lower imports do help shrink the U.S. trade deficit. And a booming domestic oil industry can certainly bolster the economy — in 2011, the oil and natural gas industries directly generated roughly $481 billion in economic activity, according to a recent estimate from PriceWaterhouseCoopers.
But falling imports won't necessarily protect the United States from high prices — or from oil shocks. The EIA expects crude prices to fall only slightly these next two years, with West Texas Intermediate oil dropping from $94 per barrel in 2012 to $91 per barrel in 2014. We'll be importing half as much oil as we did in 2005, but we'll also be paying nearly twice as much for each barrel of oil. That blunts the benefits considerably.
What's more, so long as the fall in imports is mainly being driven by new oil drilling, that doesn't do much to help alleviate climate change. The import news is a huge positive, but it certainly can't solve every problem.
Update: Michael Levi makes another related point on his blog. Because oil prices are still quite high, the United States is still spending more on imported oil as a percentage of GDP than it did at any point between 1983 and 2004: