Our world is a ‘funk’—again over global oil price spikes caused by concerns about conflict between Iran and Israel drawing the US into a war, the continuing agony of Greek debt and its euro contagion, worries that China may have deeper economic problems than thought that will drag the global economy back into recession. In other words, situation normal.
But the situation is not normal in the US since we are in the midst of the primary election season and spiking oil prices is seen as a perfect excuse to hammer the president over his failed energy policy and smoke out the republican challengers over whether they would do any better.
Over the weekend, given the slow news cycle, the Fox News Channel hammered both President Obama and oil companies over rising oil prices. They blamed growing US exports for suctioning away US supply to meet higher priced global demand and then said rising US gasoline prices were caused by global market conditions. Then they blamed the president for not climbing his bully pulpit and pummel the oil companies for playing this global commodity pricing game.
The rest of the news media reported on rising gasoline prices factually for the most part. No rants or tantrums like on Fox. I wondered if this was because generally the global warming progressives favour higher gasoline prices to reduce demand or whether they did not want to seem to be criticizing President Obama for higher prices. Or whether most of them were off on the long weekend break and this story would keep until this week. Some of each I presume is the logical explanation.
Decoupling is Our Friend
The answer to our outrage is not anger but revenge. The revenge of domestic energy production. The revenge of growing supply sufficient to increase the global swing productive capacity of oil thus undermining oil price speculators. The revenue of decoupling US gasoline prices from global commodity markets through domestic energy growth and increase domestic energy security.
The best evidence is right before our eyes in the spectacular growth in unconventional natural gas now grown so much that it has created a glut that—yes, fuels exports. US exports of petroleum products has been growing fast because demand for energy is high around the world even if it is so-so here in the US because of our lingering economic slump. There are far worse fates than using exports growth to pay for the increase in swing productive capacity to create more domestic economic growth and domestic energy security for the long term.
We’ve allowed ourselves to play ‘energy victim’ too long dependent upon OPEC and other dictators around the world who use our petro dollars against us. But we have eaten from the tree of unconventional oil and gas in the middle of the onshore garden and our eyes are opened and see that we have been naked we are ashamed. The good news is it is not too late. We have been given a gift hidden for ages in the shales and oil sands and now we have the technology to put it to work. This is our Epiphany, people! Rejoice and be glad. Do not let the doomsayers tell you it cannot be done, for we have already done it with natural gas and now it is time to do it with oil.
HELLO—there is no slump or recession in North Dakota people! And all those E&P dollars are being recycled through the North Dakota economy doing what dollars were meant to do—buy stuff we need, pay bills, build savings, send kids to college.
Growing production of domestic onshore energy from unconventional shale in the US and oil sands in Canada is increasing energy supply above current demand, rationalizing our energy infrastructure for its future, and decoupling natural gas prices from global prices.
If we want lower domestic gasoline prices we must do the same thing to oil E&P and refining that we have done successfully for natural gas. PRODUCE MORE!
The answer is not to send the posse out to arrest the oil companies, but to unleash the unconventional oil and gas markets in North America to expand supply and reduce the coupled power of OPEC and the super majors by democratizing the American energy business with many more producers in genuinely competitive markets.
The answer is to build more energy infrastructure for E&P, gathering, refining and storage so we have access to the resource, are able to transport it where needed (that is why WTI prices are slumping people because we have allowed a bottleneck at Cushing the WTI pricing point), refine it into the vast array of products sought in competitive global markets and get back into the exports business that will grow our economy just as it has grown China’s and OPEC’s.
President Obama has high gasoline prices on his shoes in this election because it just goes with the job. But he would be much better off today if he had approved the Keystone XL pipeline project than pandered to his environmental base at the expense of the rest of America. Today he could be inoculating himself again Republican attacks by saying —I told you we needed this pipeline to prevent this kind of price spiking in the future—now let’s get it built! He’d be golden today instead of scraping his shoes.
I like Bill O’Reilly and Fox News but there are wrong on this issue. But something good could still come out of this if we are lucky. That good could be an end to all energy subsidies—ALL of THEM—let the market decide. Another good outcome could be more public support for domestic energy growth in oil and gas from shales and oil sands to speed the decoupling process by increase global supply of swing productive capacity. A third good outcome would be that same ripple effect that will raise confidence, make America a magnet for new investment, create jobs, grow our economy faster than the rest of the world as we get our energy mojo back.
Forget all this political redistribution of wealth crap in the election cycle—what American want is good, old fashioned opportunities—and for our politicians to go back to kissing babies instead of kissing #$$!
There ends the rant
By. Gary L Hunt
Gary Hunt is President, Scalable Growth Strategy Advisors, an independent energy technology and information services adviser and a partner in Tech & Creative Labs, a disruptive innovation software collaborative of high tech companies focused on the energy vertical. He served as VP-Global Analytics & Data at IHS/CERA; global Division President at Ventyx, now an ABB company; and Assistant City Manager-Austin Texas responsible for Austin Energy and Austin Water.