US economy to remain tied to fluctuating oil prices: report

Even amid the recent surge in oil production, the U.S. economy won't escape from ever-fluctuating international oil prices anytime soon, analysts reported Monday.

Despite "improvements in its oil security, the United States would remain far from being truly insulated from the high and volatile oil prices characteristic of the global oil market," Securing America's Energy Future (SAFE), a nonpartisan group aiming to lessen America's dependence on oil, said in an Oil Security Index.

While the U.S. is moving toward self-sufficiency, its oil consumption is the highest in the index at 1.7 gallons per capita each day. And it seems unlikely that the U.S. will meet its own energy needs in the short-term, despite the domestic production that could raise over the long-term by methods like hydraulic fracturing.

Even if the U.S. produces the lion's share of its own energy, "there are other ways the U.S. will be connected to the global market," said Anthony Yuen, global energy strategist at Citigroup. "The U.S. is still going to be reliant on Canadian output."

But the advantages to the U.S. oil boom still remain apparent, analysts note.

"When there's unrest in Nigeria, that has the capacity to hurt the economy," said Phil Flynn, senior market analyst at The Price Futures Group in Chicago.

Flynn disagreed with SAFE's report.  

"The bottom line is that the U.S. is going through an energy boom," said Flynn." I don't know if everyone's grasping how quickly it's coming."

Flynn also feels the U.S. oil boom is "good for the world's economic growth."

"The country is hopefully going to export more oil and gas from a place where it's not going to be held hostage, as opposed to from a cartel that decides what the price is."

But while the U.S. is fueling itself, much of the world will be using coal as a primary source of energy. Coal will pass oil as a key fuel by 2020, according to a presentation by energy consultant firm Wood Mackenzie at the World Energy Congress in Daegu, Korea Monday.

The firm's report concludes that developing economies will continue to rely on cheaper fuels like coal.

Citigroup's Yuen noted, however, that China – traditionally a major global coal producer and consumer – recently banned coal-fired power plants in major cities to combat chronic pollution.

"Since the growth in coal demand is driven by global power demand, primarily in India and China, there is no material competition between coal and oil. This means it doesn't have an influence on the U.S. oil position," William Durban, Wood Mackenzie's president of global markets told Al Jazeera via email from Daegu.