Petroleum production “from the U.S., Brazil, and Guyana is rising much faster than initially expected,” and as a result, for “the next several years, at least, continually unified, vigilant, and effective OPEC+ supply management will be required to prevent a collapse in oil prices.”
A little more than 12 years ago, I wrote the column below. It’s almost like I know what I’m talking about, right?
Enjoy!
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We all know that the Arabs control $16 billion in this country. They own a chunk of Fifth Avenue, 20 downtown pieces of Boston, a part of the Port of New Orleans, an industrial park in Salt Lake City. They own big hunks of the Atlanta Hilton, the Arizona Land and Cattle Company, the Security National Bank in California, the Bank of the Commonwealth in Detroit. They control Aramco, so that puts them into Exxon, Texaco, and Mobil Oil. They’re all over — New Jersey, Louisville, St. Louis, Missouri. … Right now, the Arabs have screwed us out of enough American dollars to come right back and with our own money, buy General Motors, IBM, ITT, AT&T, Dupont, U.S. Steel, and 20 other American companies. Hell, they already own half of England! So listen to me. Listen to me, goddammit! The Arabs are simply buying us. There’s only one thing that can stop them. You! You!
— Howard Beale (Peter Finch), Network
It’s been 35 years since “the mad prophet of the airwaves” warned his countrymen about Arabs’ plot to seize the Republic with their petrobillions.
Howard Beale’s admonition hasn’t held up well.
OPEC’s bearded villains don’t own General Motors. Nor do they hold anything close to a majority of the national debt. And although “energy security” hysterics choose to remain clueless, in 2010, OPEC’s Middle East members supplied less than 40 percent of America’s crude imports.
Foreigners still ship plenty petroleum to the U.S., but increasingly, they aren’t Arabs. Since 2000, Canada’s exports have risen by 40 percent. The first decade of the 21st century saw the combined contribution of Russia, Kazakhstan, and Azerbaijan grow by 62 percent. Brazil was the period’s star — its sales soared by a factor of five. Imports from Cameroon and Colombia are growing. India and Indonesia, too.
Dozens of non-OPEC nations now supply crude to the American market. Meanwhile, the cartel faces a bleak future. Its production is slipping, a phenomenon driven by xenophobic nationalization. By excluding nondomestic investment, technology, and know-how, OPEC’s government-run oil “companies” — e.g., Saudi Aramco, National Iranian Oil Company, Kuwait Petroleum Corporation, Abu Dhabi National Oil Company — are pushing themselves toward irrelevance.
Overall, reliance on petroleum tapped abroad hit its zenith in 2005, when a hefty 60 percent came from beyond our borders. But in a May bulletin, the Energy Information Administration (EIA) wrote that “dependence on imported oil has dramatically declined … . By the broadest measure, [it] fell below the 50 percent mark last year for the first time since 1997.”
An improved method to calculate imports and exports explained part of the dip, but increased production and lower consumption were important, too. Environmental extremists employ legislation and lawsuits to erect obstacles, but American drillers are pressing ahead, and enjoying success. Output, reported the EIA, “increased by an estimated 334,000 [barrels per day] between 2005 and 2010, further eroding the need for imported crude oil.” While it gets most of its press when used to extract natural gas, hydraulic fracturing also produces petroleum. Better imaging techniques make finding profitable deposits easier. Enhanced oil recovery, a process that often makes use of carbon dioxide, boosts wells’ yields.
With the price of gasoline soaring in recent years, Americans, constantly slandered by elites as “addicted to oil,” have cut back. In 2010, consumption fell by nearly 8 percent over 2005’s record demand. Telecommuting, hybrids, and natural-gas vehicles are growing in popularity. Companies’ preference for building workplaces in the suburbs, where most of their employees live, leads to gasoline savings. Households switching from expensive heating oil to cheap natural gas also helps. Measured by either population or economic output, the trend is toward greater petroleum efficiency.
So while Howard Beale had some interesting things to say about television’s twisted depiction of reality, he wasn’t much of an energy seer. It’s an error worth keeping in mind as other prognosticators peddle the next “inevitable” apocalypse. A decade after Beale, The Land of the Rising Sun was destined to “overtake” (whatever that means) America. But not much is written about that meme anymore — probably because Japan’s economy is pathetically stagnant and its trade surplus with the United States plummeted by an inflation-adjusted 45 percent between 1986 and 2010.
“You” didn’t have to do anything to stop the Arabs from “buying us.” The failures of nationalized oil companies, a well-functioning global market for crude, new technology, and changing consumer habits did the trick.
The world is far more complex than energy alarmists understand.
So much for M King Hubbert's "peak oil" prediction. I was all aboard that theory because it had been propounded by the smartest people in the room. I'm older and wiser. That having been said, I was living in Chicago in 1973 when the Arab oil embargo hit. Not much fun for those who had to drive to work.