”Energy resources are so limited that not only can’t the present living standard of the United States be available to all mankind, it is not likely to continue in this country beyond the present decade.”
—Lawrence Rocks and Richard P. Runyon, “The Energy Crisis,” 1972
“The U.S. Just Became a Net Oil Exporter for the First Time in 75 Years — Shale Boom Has Boosted U.S. Crude Oil Shipments to Record”
—Bloomberg News headline, Dec. 6, 2018
The stunning turn of fortunes was largely overlooked in a whirlwind of other Washington news this month: Nearly half a century of free-market initiatives and government encouragement has turned what long looked like an American weakness into a strength.
“We’re becoming the dominant energy power in the world,” Michael Lynch, president of Strategic Energy & Economic Research, told Bloomberg. The United States is now the world’s biggest petroleum producer, ahead of Russia, Saudi Arabia, Venezuela and all the others.
That’s remarkable news for Americans with capacious memories. In the early 1970s, energy shortages pounded the American psyche and drove several of the world’s supposedly robust industrial economies into recessions. Arab members of OPEC, the Organization of the Petroleum Exporting Countries, retaliated for U.S. support for Israel during the Yom Kippur War by placing an embargo on oil shipments to this country.
Humbled by the sudden realization that fickle Mideast regimes held so much clout over them, Americans sat in long lines to buy increasingly expensive motor fuels.
The U.S. is likely to be a minor net importer for some time. Yet the net export of 211,000 barrels a day of crude oil and refined products is a stark contrast to the reliance on other countries at the peak of U.S. dependency. That came in 2005, when this country imported a net 12 million barrels every day — 60 percent of the nation’s crude oil consumption.
The fracking revolution’s bonanza of energy production was mostly unanticipated. In 2008, the International Energy Agency estimated that U.S. oil and gas production would be flat to declining until about 2030. Instead, by 2013, U.S. crude production had leaped by 49 percent.
And U.S. production continues to surge. The Wall Street Journal says America’s wells are expected to produce 28 percent more crude in 2019 than they did in 2017.
Market forces and market freedoms birthed fracking and related extraction technologies that have vastly increased the potential supply of oil and natural gas. These techniques create their own environmental risks, and we won’t diminish or ignore them. That said, no incentive has been as integral to U.S. energy domination in recent years as the ability of wildcat drillers and other entrepreneurs to win returns on their investments.
In this country, governments let market pricing drive refiners’ decisions on how to align supplies with demands.
So the move toward energy independence — with its enhancement of affluence at home and U.S. influence overseas — has come more despite than because of government interventions.
Producing goods the world wants to buy is an expression of America’s economic strength. Each barrel of American oil shipped overseas helps offset purchases here of foreign-made electronics and other goods. And imagine how the notion of growing U.S. independence from global oil markets frustrates the leaders of Russia, Iran and other countries whose energy exports largely drive their economies.
The startling rise of the U.S. energy outlook, including this month’s news about oil exports, once again reminds us:
Prophets of doom tend to underestimate the power of liberated initiative — this ability of their fellow Americans to invent solutions that the prophets, blinded by their certitude, cannot see.