Saudi Oil Attacks Didn't Spark a U.S. Fuel Crisis. Thank Texas

Mon, September 16, 2019

The world is not facing an oil crisis.

Yes, half of Saudi Arabia’s daily production capacity was knocked out last week when facilities were damaged by airstrikes. Yes, if it takes many months for the Saudis to repair the facility, that could keep oil prices elevated.

But there is no energy crisis, at least not today. No need for the U.S. military to secure oil in the Middle East for American consumption, no immediate need to tap emergency U.S. oil reserves, certainly no need to top off your gas tank today and hoard fuel in your garage.

That’s because the world, and especially the U.S., has plenty of oil. The Saudis have enough reserves to keep their customers supplied for a month; the kingdom even told other OPEC countries to stand down in boosting production. And U.S. producers have the ability to quickly boost oil production thanks to fracking technology.

Consider that the U.S. now produces more oil than Saudi Arabia.

The attack cut Saudi crude output about in half, removing 5.7 million barrels per day of supply, or 5% of global supply, and, according to Reuters, constrained about 2 million barrels per day of spare production capacity.

In June, according to the Energy Information Administration, the U.S. produced 16.9 million barrels of oil per day.

A bump in oil prices, instead of creating a global fuel crisis that descends into economic depression, is more likely to prompt energy companies to produce more oil in Texas. A sustained rise in oil markets by a few dollars a barrel could mean it’s suddenly profitable to drill more wells in certain fields or re-frack wells that are petering out. Most producers have these plans ready — they hire smart people to do hard math on the best way to make money at various oil price levels. Producers would just need to get the rigs and fracking equipment rolling. (And in some cases, get more investment money flowing.)

No fuel emergency, at least not yet. Still, we are pleased by two of President Donald Trump’s responses. First, he made noises about tapping the U.S. strategic reserve. Even if that proves unnecessary, his comments may calm oil markets, and that’s good.

Second, he has instructed federal agencies to expedite approvals to build oil pipelines to carry domestic oil from field to market. Is the president using the occasion of breaking news to stump for long-term projects that aren’t likely to have any real impact on today’s issue? Probably. But in this case, he’s still right. If Americans are to continue using oil, then Americans need to build modern, efficient infrastructure to carry the oil to the end consumer.

The dream of cutting our dependency on foreign oil is reality, and we don’t have to protect our economic interests in the Middle East the way we once did. Thanks to west Texas, we have more room to maneuver at home and abroad.