U.S. Oil Production Takes Center Stage. Why We Need To DRILL, BABY, DRILL

oil

While we were all distracted with Ferguson, et al, the world of oil got itself in a tizzy. The price of light crude oil is being pushed so low that many producing countries are complaining.  LOUDLY.  (The lower the price of crude oil goes, the less money countries like Saudi Arabia make…and have less disposable income to finance wars under the table.)  And it seems American entrepreneurs and innovators are all to blame.  Again.

Tomorrow morning, Wednesday, just like every other Wednesday, a report will be released that tells the world how much crude oil the United States produced this week.  That number has been increasing to Reagan-era levels throughout 2014.  This includes the oil drilled in the American Shale Revolution which is driving down the raw commodity price and eventually effects the everyday consumer when the price of gasoline drops, as it has steadily since summer.  (Isn’t the law of supply and demand a great thing?)

US Crude production

What will also happen in the half hour after the new number is released is a lot of horse trading in the stock market as bets are made regarding which of the little guys (the start-up companies which are producing shale oil and natural gas) in the game can survive low per barrel prices.  It is assumed that several of the newer and smaller companies will be forced to sell out in early 2015 if the price of oil goes too low.  Their profits will not be high enough to survive below a certain level.  If the price goes low enough, they will most likely be bought out by what is left of the Standard Oil spin-offs.  (And the price of oil will likely rise.)

However, what seems to be the main thorn in the paws of the OPEC tigers (Saudi Arabia, Venezuela, Russia, Iran, etc.) is that in order to protect their market share, they must maintain high production levels.  As stated above, that cuts into their profits (and their mad money supply).

Not to put too fine a point on the Reagan era comparison, but according to K.T. McFarland, who was part of the Reagan Administration, what won the Cold War Part I was the United States opening the oil spigot.  The Soviet Union was financed on high oil prices.  The U.S. increased production, the price of the commodity dropped and suddenly the Soviets had no spare cash.  Or any cash, actually.

Saudi Arabia, our frenemy, is now complaining to anyone who will listen about high American oil production and what a bad thing it is for the world.  That the glut of oil on the market will financially hurt Iran, they swear is not an issue.  (Sure.)  The reality is, due to American innovation, increased production and side-stepping the Obama Administration’s attempts to tax the industry out of existence, free markets and the Shale Revolution are seriously cutting into the OPEC cartel’s profits.  A quick glance at the list of countries that belong to OPEC, and the idea that oil production ties directly to American foreign policy crystalizes.

For those who do not think that DRILL, BABY, DRILL should be one of the primary concerns for any American presidential candidate, this week’s oil spectacle should settle that debate.  Most of the world’s trouble makers are at least partially financed on high crude oil prices.  The only way to keep those prices high is to limit production.  It is in the best interest of the United States on multiple fronts to pump additional oil into the world-wide market to drive the price of crude oil low enough that our foes – real and/or wannabes – cannot underwrite the cost of armed conflicts, and put some pep into our own economy at the same time.  (And if the American drilling moratorium is lifted, with leases from drilling on federal lands we might be able to put a little dent in that debt Obama has racked up.)

For more information on how the Shale Revolution is transforming our economy, Forbes has a good overview.

About the Author

Cultural Limits
A resident of Flyover Country, Cultural Limits is a rare creature in American Conservatism - committed to not just small government, Christianity and traditional social roles, but non-profits and high arts and culture. Watching politics, observing human behavior and writing are all long-time interests. In her other life, CL writes romance novels under her nom de plume, Patricia Holden (@PatriciaHoldenAuthor on Facebook), and crochets like a mad woman (designs can be found on Facebook @BohemianFlairCrochet and on Pinterest on the Bohemian Flair Crochet board). In religion, CL is Catholic; in work, the jill of all trades when it comes to fundraising software manipulation and event planning; in play, a classically trained soprano and proud citizen of Cardinal Nation, although, during hockey season, Bleeds Blue. She lives in the Mid-Mississippi River Valley with family and two cute and charming tyrants...make that toy dogs.