Twice over the past decade, oil prices surged enough that frackers responded by drilling more wells and putting more oil on the global market. This has exposed every fracking company to the volatility of the global oil market. Global market forces, not our abundance of domestic fossil fuels, set the price of oil and gasoline in the United States. Since Congress lifted the ban on oil exports in 2015, all American-drilled oil and some of our natural gas have been priced on the international market. oil companies have developed the opposite of independence. oil industry as it exists today, there is no way to spin up new oil production in a few weeks or months. Now Texas oil comes from modern horizontal fracking wells, which take six to eight months to produce their first drop of oil. Texas’s easy-to-reach resources have since dried up, so the commission no longer plays its price-setting role. The Texas Railroad Commission opened and closed the state’s formidable taps. But this happened, remarkably, at the state level. During the first half of the 20th century, when America truly dominated the global oil industry, one government in the United States actually was able to set prices at the global level in the same way that the OPEC Plus cartel does today. It has no policy tool to quickly increase or decrease drilling. The federal government does not claim any right to the oil or gas under private land. The United States does not take this approach to its fossil fuels. They consider fossil-fuel production to be a question of national security, and they regulate it as such. For geological and political reasons, they maintain some spare capacity, that is, oil-pumping capacity that can be turned on and off within six months. When oil prices leap worldwide, major oil-producing countries such as Saudi Arabia and the United Arab Emirates are able to insulate their citizens from the shock. It certainly hasn’t helped slow down climate change.Įnergy independence was not, let it be said, an altogether terrible idea. with more industrial capacity in an emergency. Energy independence has neither insulated the economy from geopolitics nor provided the U.S. gas prices to more than $4.10 a gallon, setting a new all-time high. As he spoke, Russia’s invasion of Ukraine pushed U.S. But what a funny kind of independence it is. On paper, “we are energy independent,” John Hess, the CEO of Hess, said yesterday at CERAWeek, the energy industry’s annual conference. Since 2018, the United States has been the world’s largest producer of oil and natural gas. Perhaps it could even abandon its costly military bases in the Middle East. produced its own fossil fuels, the thinking went, then it would be protected from faraway wars and crises. The project failed, but since then every president from Ronald Reagan to Barack Obama has aimed for “energy independence.” (Donald Trump, with characteristic flair, modulated this to “energy dominance.”) If the U.S. In 1973, President Richard Nixon announced Project Independence, a campaign to wean America off foreign oil by 1980. The episode reveals the power-and problems-of a vision that has guided U.S. If they had been carrying Qatari gas, they would have gone all the same. In late December, European natural-gas prices stood at then-record highs. No, the tankers’ journey to Europe was choreographed by the same force that every year sends cardiologists to Florida: abundant and profligate demand. The freedom-loving people of Houston had not donated gas to their Lithuanian kin. The ships, after all, did not change course because the State Department had requisitioned the gas. Or … does it? Upon closer inspection, the fleet demonstrated not the raw power of American industry, but the inescapable supremacy of the market. (The institute, despite its scholastic name, is Washington’s leading lobbyist for the oil-and-gas industry.) “As in World War II and other crises, America has Europe’s back,” Mike Sommers, the chief executive of the American Petroleum Institute, wrote last week. Now, thanks to the U.S.-invented technology of hydrofracturing, or fracking, the country produces more gas than it can consume. As recently as the mid-2000s, energy companies fretted that the U.S. This represented more than a minor milestone in global energy history. supplied more natural gas to Europe than Russia did. On the days they pulled into port, the U.S. In December, in a ballet of global logistics, more than 30 tankers ferrying liquid natural gas from the United States to various destinations around the globe-Japan, Brazil, South Africa-canceled their trips and set a new course for the European Union.
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