The OPEC oil embargo, which caused long lines for gasoline and brought the issue of U.S. dependence on foreign oil into American living rooms, hit U.S. energy markets 40 years ago this week. Baby boomers well remember the long waits at gas stations, high fuel prices and the realization that the U.S. economy now lied prostrate in the face of Arab oil barons.

The fallout from the crisis prompted every subsequent presidential administration to lay out its plan for reduced dependence on foreign sources oil. The proposals have proffered energy policy ideas as varied as nations from which we now quench our thirst for crude. From increased domestic drilling and offshore oil and gas production, to switchgrass-derived biofuels, and renewables such as wind and solar, no proposed energy policy has had much of an impact on our demand for foreign oil. These reforms have provided a modest increase in energy supplies and demand moderation but Americans shouldn’t have to wait for another catastrophic event to have sound  national energy policy

But the winds of change are blowing.

It’s ironic that this historical milestone is preceded by news that the U.S. is now the world’s largest energy producer. Just last week, news broke that the U.S. is on pace to overtake both Saudi Arabia and Russia in oil and gas production this year. New techniques in energy exploration such as hydraulic fracturing and horizontal drilling have driven up U.S. oil and natural gas production in dramatic fashion. They have also lead to new discoveries of domestic crude oil and natural gas prompting my organization, Consumer Energy Alliance to predict that, with the right policies, North America can achieve energy self-sufficiency by 2020.

This self-sufficiency is driven in part by our technical ability to access oil and gas resource long thought impossible or uneconomical to tap. Indeed, the Permian Basin in west Texas has gone from a sleepy backwater (in both real and energy terms) to an oil-producing powerhouse as the second largest oilfield in the world. With help from the Permian Basin and the Eagle Ford Shale in the south of the state, Texas oil production is north of 1.8 million barrels per day, ranking the state as the world’s 13th largest oil producer. Predictions are that it will surpass Kuwait, the United Arab Emirates, Iraq, Iran and Canada within two years. Additional production of oil in the Bakken field in North Dakota, and natural gas production in the Marcellus and Utica formations in eastern Ohio and western Pennsylvania are also driving up U.S. energy production.

North American energy self-sufficiency is also being driven by a reduction in U.S. energy demand. Our home heating fuel and gasoline demand have dropped in recent years due both to price activity and an increase in energy efficiency. While our aggregate energy demand will increase in the coming years, the rate of increase will be lower than in the past and per-person energy use will fall.

Renewable sources of energy are surging. Again, Texas is a leader. The Lone Star State is the nation’s largest producer of wind energy at 23 million megawatts, up 20 percent from 2012. Wind power represented the largest increase of new electricity generation capacity (43 percent) in 2012.

All this is leading to dramatic reductions in imports of crude oil from overseas. As production increases and demand drops, imports of crude oil and natural gas from other countries are at decades-old lows, providing a favorable boost to the U.S. trade deficit and a reordering of the U.S. economy. With the potential construction of the Keystone XL pipeline, and the import of the 800,000 barrels of oil per day it would carry, we could have the ability to reduce crude imports from Venezuela and Saudi Arabia almost entirely. Further buoying the economy, a recent report from IHS concludes that hydraulic fracturing produced a net $1200 in real household disposable income for Americans in 2012 and as many as 1.7 million jobs.

The OPEC cartel is afraid. While the sheiks hide behind blustery rhetoric, they understand the risk their global monopoly is exposed to with the proliferation of “unconventional” oil and gas in North America and beyond. Many experts say this new paradigm is leading to one of the largest changes in U.S. foreign policy dynamics, ever.

It’s also ironic that despite years of trying, a comprehensive national energy policy has failed to deliver a solution to the challenge issued by the OPEC oil embargo. Following the crisis, some reforms were made, such as Corporate Average Fuel Economy standards for motor vehicles, and the expansion of Prudhoe Bay oil production and the Trans Alaska Pipeline.

But after forty years of Washington’s nibbling around the margins, the U.S. energy industry stopped waiting and started innovating. Thanks to the ingenuity and resourcefulness of the American energy industry, we can all sleep a little better a night and know that the events of 40 years ago won’t come back to visit us again. The world, as it relates to energy, is a dramatically different place.

Growth in the U.S. economy depends on access to affordable energy.  Every sector of the U.S. economy relies on energy to transport its goods and services, power its facilities, or manufacture consumer goods. For the manufacturing, transportation, and agriculture industry – energy is the biggest single expense, sometimes eclipsing labor costs.

Even slight increases in the price of fuel translate to higher costs for goods and services as transporters and manufacturers are forced to pass along some of the higher fuel costs that cannot be absorbed. To illustrate, the trucking industry alone consumes more than 36 billion gallons of diesel fuel annually.  The sector pays an additional $350 to $370 million a year in fuel expenses if diesel prices increase just one-cent. Similarly, for every dollar-per-barrel increase in the cost of oil, the airline industry’s fuel bill increases by $420 million, according to Airlines for America.

Public policy that limits access to energy resources harms our nation’s fuel consumers and, more broadly, the entire U.S. economy.  In each recession in the last forty years, high oil prices precipitated contraction of the U.S. economy.  According to IHS Global Insight a 10 percent increase in gasoline prices lowers consumer confidence by about 1.5 percent.

Electricity consumers face a similar problem. Particularly energy-intensive manufacturers and low-income families, a slight rate increases can translate into higher bills. Nucor Steel recently noted at Consumer Energy Alliance event in Tennessee that it costs the company $200 million for every one cent per kilowatt-hour increase in their electricity rates. 

You will find a similar relationship at the individual consumer level.  For vulnerable populations including low-income families, utility bills can account for upwards of 30% of a family’s income. Rising energy prices limit the economic opportunity of families and businesses, creating a vicious cycle of economic stagnation.

The consequences of high energy costs are real. Families living paycheck to paycheck cannot be forced to absorb higher costs in the name of bad public policy. Every single piece of legislation, every proposed rule, every action undertaken at the federal and state levels that affects energy production and utilization should be weighed against its economic impact on energy consumers. After all, they are paying the bills.