I recall hearing quite a bit from various governors that the US is the “Saudi Arabia of coal” or the “Saudi Arabia of wind,” or whatever natural resource they had in abundance. Now, according to AP energy writer Jonathan Fahey, the US verges on becoming the Saudi Arabia… of oil.
U.S. oil output is surging so fast that the United States could soon overtake Saudi Arabia as the world’s biggest producer.
Driven by high prices and new drilling methods, U.S. production of crude and other liquid hydrocarbons is on track to rise 7 percent this year to an average of 10.9 million barrels per day. This will be the fourth straight year of crude increases and the biggest single-year gain since 1951 […]
The Energy Department forecasts that U.S. production of crude and other liquid hydrocarbons, which includes biofuels, will average 11.4 million barrels per day next year. That would be a record for the U.S. and just below Saudi Arabia’s output of 11.6 million barrels. Citibank forecasts U.S. production could reach 13 million to 15 million barrels per day by 2020, helping to make North America “the new Middle East.”
The last year the U.S. was the world’s largest producer was 2002, after the Saudis drastically cut production because of low oil prices in the aftermath of 9/11. Since then, the Saudis and the Russians have been the world leaders.
A few things here. First, drill baby drill happened. These numbers don’t lie. All this talk of the Obama Administration being hostile to drilling is ridiculous. But drill baby drill did nothing to 1) change our posture toward intervention in the Middle East, which was one primary goal, or 2) actually lower gas prices, which was another. Global demand rose with this increase in supply, which isn’t all that much from a global standpoint. And prices have responded accordingly, i.e. not very much. In fact, the high price of oil has made the horizontal drilling technologies that increased US production possible, and therefore those prices will have to stay where they are, at least above $75 a barrel. One way the Saudis and other OPEC nations could regain market share is to flood the world with oil, but it’s unclear they have the reserves to make that work long-term.
Second, given the predominance of large oil companies doing this drilling work and making these profits, the need to cancel $40 billion in subsidies for the richest industry in America becomes more clear.
Third, the track record of governments in petro-states is pretty grim. There are too few Norways and too many, well, Saudi Arabias. Authoritarianism is a defining characteristic of most petro-states, as is inequality, as oil wealth does not get shared with the public, even if the public owns the land from which the oil gets extracted. And we’re seeing elements of that appear in the US.
Fourth, environmentally this is a complete disaster that comes directly from failing to put a price on carbon. The oil industry still doesn’t pay for their own externalities, and as a result they make subsidized profits at the expense of the public at large. The oil surge comes from fracking as much as the gas surge does; the energy comes out of the same sort of shale rock (as natural gas got explored too much and the price dropped unsustainably low, much of the resources moved to fracking for oil, in fact). And this puts drinking water at risk for contamination, in addition to the global warming pollution that results from burning fossil fuels. And mass movement aside, when the US is this big a player in oil production, it’s going to be nearly impossible to stop the forward motion here. The expectation of 1.3 million jobs created by this oil boom, the tens of billions of dollars a month made by these companies, the chunk of that devoted to lobbying politicians, that tilts the playing field in impossible ways.