The United States is poking a thumb in OPEC’s eye. It feels good.
The oil producing countries of OPEC humiliated this country in 1973-74. They stopped selling oil to us. They did so because we sold weapons to Israel — for its war against Syria and Egypt.
Led by the Saudis, the cartel quadrupled the price of oil. This wreaked all sorts of havoc in this country and the world. Some believe it helped cause our stock market to crash.
There were two or more sides to the issue. What hurt was that OPEC nations used oil as a weapon. They showed no mercy. They shrugged as their high prices caused turmoil in Europe and America. And we could do little about it, because we had allowed our own oil production to fall. And we had allowed ourselves to be dependent upon importing oil from the OPEC countries. They turned out to be not dependable. They humiliated America. They made us beg, on the world stage.
The shoe is on the other foot these days. American ingenuity has discovered and brought vast quantities of oil and natural gas to the market. The abundance is enough to heavily influence oil prices that OPEC used to control. Our frackers have de-fanged OPEC.
The Saudis recently tried to counter this. They tried to control prices again — to drive our frackers out of business. More American ingenuity to the rescue. The fracking industry can now throttle back and rev up at speeds that were impossible a few years ago.
American frackers consolidated. They survived. They found ways to remain profitable at the low prices the Saudis jiggered to hurt this country. As soon as prices rose a bit they ramped up their production. In other words, they humiliated the Saudis and OPEC. Those countries deserved a bit of humiliation. They declared themselves to be virtually our enemies those many years ago.
This has been American entrepreneurial genius at its best. In a mere eight years, our oil producers nearly doubled their production. Their output continues to grow.
And so, we are no longer dependent on OPEC. We compete with OPEC. We are now exporting up to 2 million barrels of oil a day. China is a major customer. We are shipping natural gas to Europe. This forces Russia to lower its prices. It keeps Russia from using its gas and oil as weapons there.
History will show that this miracle came from our capitalism. (In socialist Venezuela, oil production is shrinking.) History will also show that the Obama administration tried to thwart the American oil miracle. The Trump administration is working hard to encourage it — by reversing many of the Obama energy policies.
History will also treat the pessimists poorly. For decades, they declared we had reached peak oil and gas. President Jimmy Carter led pessimists when he declared the world was simply and rapidly running out of oil and gas. The green activists fed him bunk and he chastised Americans with that bunk.
Carter and the greens ridiculed optimists. They scoffed at those who said the world had abundant oil and gas, waiting to be discovered. They predicted famine and economic collapse as the supplies of oil and gas shrunk.
Right. Our natural gas reserves have “shrunk” so much we only have about 93- years-worth in known reserves today. And our known reserves of oil keep growing.
Meanwhile, we keep finding ways to do more using less energy. The result? Doomsday — when we will run short of oil and gas — has been pushed out many years. Way beyond your lifetime. Enough years that there is no question earthlings will develop replacements by then.
Our frackers have reduced the chances of us going to war in the Middle East. Back when OPEC was humiliating us, we needed to protect their countries. Because they ran our oil lifeline. That era has passed. And not before time.
From Tom…as in Morgan.
Tom Morgan writes about political, financial, and other subjects from his home in upstate New York. You can write to Tom at email@example.com. You can read more of his writing at tomasinmorgan.com