OPEC takes backseat to U.S. shaleJune 25, 2013
Fracking continues to diminish the influence and domination of global energy markets by the Organization of Petroleum Exporting Countries by increasing American production. The weakening of OPEC means: 1) a smaller chance of price shocks and supply disruptions, 2) less dependence on hostile Middle Eastern countries, along with a reduced need for political and military entanglement with those countries, and 3) less petrodollars flowing toward terrorism.
This June 4 editorial from the Houston Chronicle explains how technological advances are causing major shifts in the balance of global power:
Move over, OPEC
Things are getting interesting vis a vis OPEC and the U.S. shale industry.
The once-omnipotent oil cartel is taking serious notice of the impact of the shale boom on global oil prices and markets.
As well it should. Increased shale oil production domestically is pushing the U.S. toward potential energy self-sufficiency by 2018, analysts predict. Boosts in shale oil production in this country already are cutting deeply into OPEC’s share of the U.S. oil market.
And that isn’t even to mention the potential impact of shale gas on the oil cartel. It’s turning out that natural gas from shale is the true bonanza wrought by hydraulic fracturing and horizontal drilling, the two technologies that have given this country access to one hundred-plus year supplies of energy almost overnight.
Since 1992, expanded use of natural gas by the nation’s electric utilities has dropped greenhouse gas pollution by 20 percent.
Expansion of the use of environmentally friendly natural gas into this nation’s huge transportation sector is in its toddler stages. The possibilities here are enormous – and threatening if you are a global energy cartel beset by internal disagreements over where to set production levels.
For decades, OPEC enforced a “take no prisoners” position on oil prices that sent the global and U.S. economies on costly roller-coaster rides tied to price and availability of oil.
We wouldn’t go so far as to suggest that the U.S. take a formal position of tit for tat.
We’d simply say that the shale boom offers the country, and perhaps the world, the opportunity of slipping OPEC’s leash while stabilizing the U.S. and other economies.
Common sense tells us we should take it, and leave OPEC to deal with the consequences on its own…