American workers and motorists got some badly needed relief last week when the price of oil plunged to its lowest level in years. The oil price has fallen by about 20 percent since its peak back in June of $105 a barrel. This is translating to lower prices at the pump with many states now below $3 a gallon.
Already the lower oil and gas prices are the equivalent of a $70 billion cost saving to American consumers and businesses. That’s $70 billion a year we don’t have to send to Saudi Arabia, Kuwait and other foreign nations. Now that’s an economic stimulus par excellence.
There are many global reasons why gas prices are falling, but the major one isn’t being widely reported. America has become in the last several years an energy-producing powerhouse. Sorry, Mr. President, I’m not talking about the niche “green energy” sources you are so weirdly fixated with.
Oil prices are falling because of changes in world supply and world demand. Demand has slowed because Europe is an economic wreck. However, over the last five years the United States has increased our domestic supply by a gigantic 50 percent. This is a result of the astounding shale oil and gas revolution made possible by made-in-America technologies like hydraulic fracturing and horizontal drilling. Already thanks to these inventions, the United States has become the No. 1 producer of natural gas. But oil production in states like Oklahoma, Texas and North Dakota has doubled in just six years.
Without this energy blitz, the U.S. economy would barely have recovered from the recession of 2008-09. From 2008 to 2013, the oil and gas industry created more jobs on net than all other industries combined.
When the radical greens carry around signs saying “No to Fracking,” they couldn’t be promoting a more anti-America message. It would be like Nebraska not growing corn.
We are just skimming the surface of our super-abundant oil and gas resources. New fields have been discovered in Texas and North Dakota that could contain hundreds of years of shale oil and gas supplies.
Here’s another reason to love the oil and gas bonanza in America. It’s breaking the back of OPEC. Saudi Arabia is deluging the world with oil right now, which is driving the world price relentlessly lower. The Arabs understand — as too few in Washington do — that the shale energy boom is no short-term fad. It could make energy cheaper for decades to come. As American drillers get better at perfecting the technologies of cracking through shale rock to get to the near-infinite treasure chest of energy locked inside, we will soon overtake Saudi Arabia as the dominant player in world energy markets.
You can’t have a cartel if the world’s largest producer — America — isn’t a member. OPEC will never again be able to hold the world at knife’s point as the Arabs did in the 1970s and at other more recent times. By the way, is there a better way to defund the terrorists who run the Islamic State or to thwart Vladimir Putin’s East European aggression than to drive down the price of gas and oil?
Yet the political class still doesn’t get it. As recently as 2012, President Obama declared that “the problem is we use more than 20 percent of the world’s oil and we only have 2 percent of the world’s proven oil reserves.” Then he continued with his Malthusian nonsense: “Even if we drilled every square inch of this country right now, we’d still have to rely disproportionately on other countries for their oil.” Apparently, neither he nor his fact checkers have ever been to Texas or North Dakota. We don’t have 2 percent of the world’s oil. We have 10 times more than that and hundreds of years of oil and gas.
America, in sum, has been richly endowed with a nearly invincible 21st century economic and national security weapon to keep us safe and prosperous. The fall in gas prices is just one visible sign of this supply explosion. Think of how much bigger this revolution could be if we started building pipelines, repealed the ban on oil exports, drilled on public lands, and stopped trying to tax and regulate the oil and gas industry out of existence.
For much of the last 40 years, oil has been a drag on the economy. Now it is one of the primary accelerators and the new, big drag on the economy is politicians who hate this industry.
- Stephen Moore is chief economist at the Heritage Foundation.
Originally appeared in The Washington Times