Shale pioneer and “petropreneur extraordinaire” Harold Hamm (Continental Resources CEO) has a great op-ed in today’s Investor’s Business Daily titled “Fracking Revolution Cuts Prices, Drives A Stake Through OPEC’s Heart.” Mr. Hamm outlines some of the important, and yet frequently overlooked, consequences of the Great American Shale Boom and its profound geopolitical and economic implications, here’s an excerpt (emphasis added):
We have heard the story before: political turmoil in the Middle East, disruption of global oil supplies by members of OPEC. In the past, the unrest in Iran would be causing oil prices to spike up. Instead they have been falling by more than 25%. Gas prices at the pump have fallen to below $3 a gallon in many markets.
That’s quite a change from the past 40 years, when OPEC and other foreign oil producers have wielded oil as a political and economic weapon to slow down and even cripple the U.S. economy. Saudi Arabia was by far the world’s biggest producer. In those years we were highly dependent on foreign oil and captive to OPEC supply disruptions, which led to a wild ride of oil price gyrations.
No more. OPEC is becoming a toothless tiger.
And the underappreciated reason for this bullish turn of events is the U.S. energy revolution and the technologies that made this all possible. Thanks to horizontal drilling and other smart drilling technologies, we have unlocked a treasure chest of shale oil and gas and other unconventional domestic sources, so America now has an almost unlimited supply.
What this means is that America is no longer a bit player in global energy production. Now our country is well-positioned for energy independence by the end of the decade and then for world energy supremacy for decades to come. Already the U.S. has surpassed Saudi Arabia as the No. 1 oil producer (see chart above) and Russia as the No. 1 natural gas producer. It’s almost impossible for OPEC to drive the world price of oil when America is the biggest producer.
At the same time, the Saudis are technologically way behind the U.S. in oil and gas drilling. The oil sheiks are nearly maxed out at their current rate of production.
By contrast, the U.S. has increased oil production by an enormous 65% over the past five years. We can and should use our nearly unlimited oil and gas supplies to drive a stake through the heart of OPEC — forever.
The energy revolution in America that I have been proud to be part of is obviously good for jobs and economic growth in the U.S. Without our industry, the U.S. would practically still be in a recession. And we are clearly helping fight terrorism by importing less oil from those who compete with and dislike us.
Now we are learning that the spectacular rise in American-produced energy is helping consumers in a big way. As technology improves, we are just seeing the first stages of higher domestic output and lower prices. The decline in oil and gas prices at the pump is like a $75 billion tax cut per year for U.S. households. Let’s see Washington deliver anything like that soon.
MP: Harold Hamm is best known for pioneering the development of the large shale oil resources of the Bakken formation in North Dakota, where those oil fields are now producing more than 1 million barrels of oil per day, double the amount just three years ago. Overall, the Bakken formation has now produced more one billion barrels of oil in total, and in the process has transformed North Dakota into an “economic miracle state” with the lowest state unemployment rate in every month since January 2009. And yet despite the Bakken miracle and its major implications for the US economy, energy security and geopolitical advantages, it’s an area of the country that President Obama has completely ignored. Until June of this year, the President had never visited the Peace Garden State during his more than five years in office, and when he did decide to make a trip there in June he visited the Standing Rock Sioux Indian Reservation where the unemployment rate is 79% instead of visiting the Williston area at the epicenter of the Bakken boom where the county jobless rate is the lowest in the country at only 0.8%. Not surprisingly, the president continues to ignore one of the greatest and most remarkable energy success stories in US history – the Bakken boom that Harold Hamm is largely responsible for – even though the energy and jobs stimulus to the US economy provided by the shale boom probably helped him get re-elected.
HT: Warren Smith