The mere threat of a disruption in oil shipments is enough to increase prices. Just imagine what a full-on blockade in, say, the Suez Canal or the Suez-Mediterranean Pipeline would do to the U.S. energy market. With the Syrian conflict spilling over into neighboring countries, and Organization of the Petroleum Exporting Countries (OPEC) members aligning on different sides in the struggle, the situation is ripe for a surge in prices. If Israel and Iran heat up, we could see oil prices soaring to $150.
America is not yet energy independent. But despite the recent spike in oil prices, our long-term energy outlook is bright. The ongoing domestic oil boom has given us the means and opportunity to break free from the tyranny of oil imports from hostile nations — but only if the United States does all it can to increase and encourage domestic energy production.
The price of West Texas Intermediate (WTI) crude — the benchmark for domestic oil prices — has been increasing. That’s good news for the futures market, and suggests the WTI is back as the world’s leading oil benchmark.
And that’s just the start of America’s sunny energy outlook. The U.S. government recently doubled its estimates of recoverable energy in North Dakota’s Bakken and Three Forks shale formations, to 7.4 billion barrels of oil and 6.7 trillion cubic feet of natural gas. And, according to the IEA, America is on track to surpass Saudi Arabia in oil output by 2017.
At the same time, OPEC is steadily losing relevance. OPEC — a cartel including several member nations with alarming amounts of Islamist violence — recently announced it expects demand for its oil to drop by 300,000 barrels a day next year, and projections for future demand for OPEC oil are flattening even as OPEC members compete more fiercely with each other for market share.
For far too long, America’s economy has been at the mercy of the politically unstable and anti-American Middle East. Now, the tides are shifting. Oil production from non-OPEC countries is expected to rise next year by 1.2 million barrels a day. And most of that new production is coming from the United States and Canada.
What’s more, Saudi Arabia’s and other oil infrastructure in the Middle East has been increasingly under attack by terrorists who are seeking to disrupt global markets by blocking oil production and transportation. Vast networks of pipelines are unprotected and vulnerable, and the terrorists know it.
However, our lawmakers can’t afford to take the trend toward true energy independence for granted. The only real threat to American energy security is, well, America. Politics could compromise this country’s energy boom.
Take the regulatory restrictions on hydraulic fracturing, popularly known as “fracking.” The recent oil and gas boom is the result of advances in this technology, in tandem with advances in horizontal drilling. In fracking, a solution that is 99.5 percent sand and water, plus a few trace chemicals, is pumped underground at high pressure to break up rock formations.
Despite the fact that over a million wells have been fracked in America with an unparalleled safety record, radical environmentalists have been trying to sway public opinion against fracking. They’re deploying easily debunked propaganda. There’s simply no real evidence that fracking pollutes groundwater, causes earthquakes or is responsible for any of the other outrageous claims being made against the practice.
The White House has also repeatedly denied approval for the construction of the Keystone XL pipeline, which would transport oil from Canada and North Dakota to refineries on the Gulf Coast. This project has been thoroughly reviewed and found environmentally sound. And its construction would create an estimated 42,000 jobs.
The White House has also been rebuked by federal courts for blocking drilling in parts of the Eastern Seaboard, the West Coast, Alaska and Florida. The President’s agenda appears to be dictated by an extreme environmental lobby opposed to all new production conventional, economically viable energy.
Our domestic energy production capacity is growing rapidly. OPEC influence is waning. America has a rare opportunity to both ensure abundant energy growth and minimize national security risks. We must make energy production and security political priorities.
Chris Faulkner is the CEO of Breitling Energy Companies.