The United States is set to become the world’s number one producer of oil and gas combined. But since the oil crises of the 1970s, U.S. energy policy has been based, either implicitly or explicitly, on the assumption of scarcity of U.S. resources. This has resulted in strong support for open and transparent global energy markets, which are expected to reduce volatile (and high) prices for U.S. customers and enable U.S. companies to access foreign energy supplies.

What policy makers now have to reckon with is what the re-discovery of a bounty of domestic supplies (of oil and gas) means for U.S. energy policy, at home as well as abroad.

Our goal for oil policy should be stability. Oil markets are global and, despite huge increases in oil production, the U.S. remains a price taker. Cleaving to a doctrine that emphasizes free markets might suggest the U.S. should also allow crude exports; but with various forecasts suggesting an oil market glut in the medium term this could lead to large-scale instability in global markets.

In the case of natural gas, should we be aiming for a specific goal, one that differs from stability? The jury is out, but with the U.S. entirely self-sufficient in natural gas for the foreseeable future, and in the absence of a truly global market for gas, a strong case could be made to use export and foreign policy to create more of a competitive, global market. This could be done by sending U.S. gas abroad; by encouraging greater natural gas production through the creation of transparent regulatory regimes in countries where reserves are held or being discovered; and by moving global energy consumption towards gas, and away from more environmentally damaging fuels.

Should we aim for leverage or stability in oil and gas markets, a mixture of both, or something different when it comes to energy and foreign policy? What steps should be taken to achieve these policy goals?