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The Daily Signal
The True Reason
Gas Prices are Falling (Hint: It’s Not Because of Green Energy)
by Stephen Moore
October 26, 2014
American workers and motorists got some badly-needed relief this week
when the price of oil plunged to its lowest level in years. The oil
price has fallen by about 25 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.
At present levels, these lower oil and gas prices are the equivalent of
a $200 billion cost saving to American consumers and businesses. That’s
$200 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. And 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. But
since 2008 the U.S. 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 U.S. has become the number one 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 the beginning of 2008 through the
end of 2013 the oil and gas extraction industry created more than
100,000 jobs while the overall job market shrank by 970,000.
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 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 supplies 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 create the level of economic
turmoil that the Arab members of OPECs engineered in the 1970s with
their oil embargo. And by the way: lower oil prices place increased
pressure on Iran’s mullahs to abandon their nuclear program and curb
Putin’s capabilities to engage in East Europe aggression.
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. And we don’t have 2
percent of the world’s oil. Including estimates of onshore and offshore
resources not yet officially “discovered”, we have ten times more than
the stat quoted by the president–resources sufficient to supply
hundreds of years of oil and gas.
For the rest of this article and more, go to The Daily Signal
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