Petroleum power continues to shift the US’ way
The days when global oil production was symbolized by Arab states are gone, and important contemporary events confirm a new reality. In mid-April, governments of major oil producing nations failed to achieve agreement on cutting back their production.
Representatives of the Organization of Petroleum Exporting Countries met in Doha, Qatar, to negotiate collective production goals. OPEC ministers were joined by Russia. Concord among them would have calmed markets short-term. Their failure encouraged price fluctuations, in turn emphasized by news media.
The Doha result confirms the weakness of OPEC, a coalition of less developed economies. In consequence, the United States has an even more promising opportunity to be prime leader in global petroleum policies, especially over the longer term.
A major frustration for the conference organizers was boycott by Iran. That government’s top priority is recapturing global market share after the recent lifting of United Nations-backed economic sanctions. This is particularly vexing for Saudi Arabia, along with Russia a top global oil producer.
Beyond Doha, world oil production and distribution is in great flux. The U.S. is rapidly expanding total production and moving from importer to exporter. A principal factor is fracking, shorthand for hydraulic fracturing or hydrofracturing. This is a process by which fluid is used to drive gas and petroleum to a well bore, where continuous accessibility for extraction is relatively easy.
The fracking process was first employed commercially in 1947 at a well in the Hugoton gas field in Kansas, but profitable applications proved extremely limited. In World War II, both the Allies and the Axis devoted great effort to increasing petroleum production and creating artificial fuels. Nazi Germany had noteworthy success regarding the latter.
Despite this background of intense innovation, fracking for years was simply not a moneymaker in the commercial marketplace, underscoring the technical challenges involved. Today more efficient, effective liquid processes are facilitating feasible fracking in substantial sections of the United States, including shale deposits in the eastern sections of the nation.
During the first nine months of 2011, the United States became a net exporter of petroleum-based products, a reversal of the trend of more than one-half century of marked growing dependence on foreign oil. Since 2008 the U.S. has annually increased the amount of domestic crude oil production, dramatically reversing another long-term trend.
This promises over time an extraordinary shift in the wider global strategic as well as energy positions of the U.S., with great and largely positive implications for foreign as well as domestic policies. Until the 1960s, the nation was a substantial net exporter of petroleum. A decade later, the U.S. and other industrial nations had become heavily dependent on imported oil, and painful, disruptive OPEC embargoes followed in 1973 and 1979.
Two other major oil producers are Canada and Indonesia. Both are close U.S. allies. Indonesia, the world’s largest nation with a Muslim majority, is fiercely opposed to terrorism.
In chemistry, a catalyst is a distinctive element that alters a reaction, and the same term applies to human affairs. Fracking increases potential U.S. international political leverage — as long as we have effective leadership.
During World War II, President Franklin D. Roosevelt in 1943 declared Saudi Arabia to be of vital strategic importance. In early 1945, he visited the country and met with King Ibn Saud. Insightful strategic vision characterized FDR’s leadership.
Such long-term vision is far more important than short-term market shifts.
Arthur I. Cyr is Clausen Distinguished Professor at Carthage College and author of “After the Cold War.”