The People of America's Oil and Natural Gas Indusry

Energy and Leadership

Mark Green

Mark Green
Posted December 1, 2014

There’s a new global energy order – with the United States at the hub. That’s the assessment in a number of articles following last week’s meeting of oil-exporting countries. Including these:

The New York Times:

Since the economically crippling oil embargo of 1973, every American president has pledged to seek and achieve energy independence. That elusive goal may finally have arrived, at least for the foreseeable future … The inability or unwillingness of OPEC to act showed that the cartel was no longer the dominating producer whose decisions determine global supplies and prices. Suddenly, the United States — which is poised to surpass Saudi Arabia as the world’s top producer, possibly in a matter of months — is in that position … “This is a historic turning point,” said Daniel Yergin, the energy historian. “The defining force now in world oil today is the growth of U.S. production. The outcome of the OPEC meeting is a clear indication that the oil exporters now recognize that this is a new market.”

The Wall Street Journal (subscription publication) editorial, “The New Oil Order”:

America’s unconventional oil boom continues to yield major benefits—economic and geostrategic. …  Not too many years ago the Organization of Petroleum Exporting Countries might have cut production to maintain higher prices. … But the cartel has lost much of its pricing power thanks in part to the revival in U.S. oil production. Horizontal drilling and hydraulic fracturing—business innovations done mainly on private land—have pushed U.S. oil output to its highest level since the 1980s. The Energy Information Administration says U.S. production reached more than nine million barrels a day this year and is expected to keep climbing. OPEC is afraid that demand for its crude will keep falling as U.S. supply continues to grow and more of it makes its way to the global market as American export barriers fall.

IHS’ Daniel Yergin, quoted by the Times above, from his own op-ed in the Journal:

The decision by members of the Organization of the Petroleum Exporting Countries on Thursday not to cut production reflects a profound shift in the world oil market. The demand for oil—by China and other emerging economies—is no longer the dominant factor. Instead, the surge in U.S. oil production, bolstered by additional new supply from Canada, is decisive.

The benefits to America are manifold. The U.S. as global energy’s new center of gravity means economic strength here at home through jobs, consumer benefits and greater energy security, and the opportunity to project positive American values abroad – by impacting global markets as discussed above and by helping friends overseas through energy exports. All result from America’s energy revolution, built on safe development of oil and natural gas reserves from shale and other tight-rock with advanced hydraulic fracturing and horizontal drilling.

U.S. producers are working to sustain and grow the revolution through innovation and continually improving efficiency. Those efforts will be aided if U.S. leaders choose a smart, forward-thinking energy path. It starts with access – to federal lands onshore and offshore and to global energy markets through oil and natural gas exports.

Access first. Our energy revolution is occurring with very little help from Washington. That is, oil and natural gas production is down in areas where the federal government has control. A congressional study found that from 2009 to 2013, oil output was down 6 percent on federal lands, and natural gas output was down 28 percent. Meanwhile, on non-federal lands, production surged – oil up 61 percent and natural gas up 33 percent. “To be clear,” API President and CEO Jack Gerard said Nov. 6, “this discrepancy is due to political science, not geologic science.”

Changing this means opening up federal areas – 87 percent of federal offshore acreage is off limits to development – turning aside duplicative and/or unnecessary regulation and streamlining the permitting process so that safe development can go forward. The Journal editorial:

All of these benefits are flowing from a U.S. oil boom that government didn’t predict and had almost nothing to do with. The political class has force-fed subsidies to renewable energy with little economic benefit. The new oil order is a reminder that markets and American ingenuity are better economic pillars than all the schemes of government planners.

To harness America’s energy opportunity, policymakers must shelve outdated energy paradigms and embrace strategies and policies that fit the new reality of plentiful energy. America’s 1970s-era ban on the export of crude oil should be ended, and federal approval of projects to export liquefied natural gas to non-free trade agreement nations should be expedited. We need energy policies that fit America’s position as an energy superpower. Gerard:

“Our goal at API is to foster a broad and nonpartisan conversation on domestic energy issues. A conversation that will create an American consensus on smart public policy decisions that will allow our nation to take full advantage of its bright energy future. We need elected leaders who understand what’s at stake and who are willing to set aside outdated assumptions and partisan talking points to work together on safe, responsible and fact-based energy policy.”

Smart, sound energy policy will encourage the long-term investments needed to keep the U.S. well supplied in the future while also creating opportunities in global energy markets – where American energy already is diversifying supply and helping create more competition.

The new world energy order is America’s energy opportunity. Needed is bold, timely leadership to embrace that opportunity.


Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.