The 'Oil Market': Time to Get Off the Rollercoaster
One look at today's headlines will tell you that events around the world seem more unpredictable and chaotic than ever. Russia is showing no sign of backing down in Ukraine, even under increasing sanctions. The terrorist group, the Islamic State of Iraq and the Levant (ISIL) continues to wreak havoc in the Middle East, energized by up to $2 million a day in captured oil revenues. And political violence from Iraq to Libya continues to escalate. Americans are stuck wondering what, if anything, we can and should be doing.
In the midst of all this chaos, oil prices were expected to rise. Instead, they have dipped in recent months, thanks primarily to lower global demand and increased production here at home. Gasoline prices have dropped for the moment too, prompting some to call this a "new era" of oil abundance, where our fuels are cheap and plentiful, even in the face of multiple international crises.
Don't fall for it. The global oil market still holds our economy hostage, threatening our national security and challenging our values.
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Looking at our country's spending on fuel sheds light on the enormity of oil's influence. Americans spent more than 5 percent of their income on petroleum fuels last year, a staggering $869 billion economy-wide. Sure, we might see some relief at the pump today, but it's almost certainly not lasting, and we are still paying double what we did a decade ago. The fact remains, we are beholden to a global oil market, manipulated by a cartel and national oil companies, many of whom rely on high oil prices to keep their economies afloat.
Expanded American production isn't likely to put the Organization of the Petroleum Exporting Countries (OPEC) out of business either, at least not in the foreseeable future. OPEC controls 72 percent of global proved oil reserves, and in total, state-run national oil companies around the world hold nearly 90 percent of global reserves. Members of the cartel keep prices high to finance their states' coffers, build up their military capabilities, and keep their people pacified. Just last month, Saudi Arabia deliberately cut its output by the most since 2012, and more cuts are now expected to prop up prices and keep us paying. Compounding intentional cuts to supply, it only takes one surprise output disruption in an unstable state like Libya, Nigeria, Venezuela or Iraq to send the cost of oil skyward.
We've seen it before. When it comes to oil, we are on a rollercoaster that we can't control, and it's time to get off.
But to do that, we need more options. Today, oil powers 92 percent of our transportation, making it the sole fuel we use to move people, goods, and services throughout the economy. Without options, we have effectively surrendered a large chunk of our economy and national security to oil-producing states around the world.
Increased U.S. oil production improves our economy, creates jobs, and decreases the trade deficit. Efforts to enhance domestic production should be supported. However, U.S. output alone will not bring us the energy security necessary to shield us from high and often-volatile oil prices.
To strengthen our energy security, domestic production must be accompanied by a policy that would break the monopoly oil holds over our mobility. Consumers should have more options, and by reducing our dependence on oil, we can free ourselves from the whims of this unpredictable, unstable global market while taking advantage of American resources and innovation.
For a daily commute, perhaps this means getting to work in an electric car. For our heavy-duty trucks, which move most of our goods about the country, we can leverage our massive natural gas resources. These technologies are available today, and through smart investment in R&D, they will continue to become cheaper, more refined and efficient ways to free the nation from oil's stranglehold, bringing us closer to a more energy-secure future.
After all, energy security is national security, and as long as we rely on a single fuel to get around, we are vulnerable. It's no coincidence that every recession and depression in U.S. history was preceded by or coincided with an oil price spike. The time has come to break free of that destructive pattern and protect ourselves from the vagaries of the global oil market, all while enhancing consumer choice.
We have a moral imperative. By exploring and implementing the technologies that reduce our dependence on oil, we will grow the economy, create jobs, and be able to better protect our allies and ourselves.
