Last December, Congress signed off on a provision in their massive omnibus spending bill that ushered in a new era for American energy. Now as shipments leave the United States with American crude, financial and political impacts of U.S. energy are finally being felt around the world.
At a time when competition is stiff and crude oil is flooding the markets, leading energy-producing countries are feeling the staggering weight of U.S. energy exports. Just last week, OPEC agreed for the first time in a decade and half to halt energy outputs to January levels. This move highlights just how much energy prices and the U.S. energy renaissance is eroding OPEC’s grip on the global energy market.
Russia in particular is worried what U.S. energy – both crude and natural gas – will do to their influence over Europe. Two shipments from the Texas Gulf Coast carrying West Texas Intermediate (WTI) crude have already landed in Europe where demand for domestically produced lighter crude oil remains high. An avenue in the Middle East also has opened up as American crude arrived in Israel, according to UPI. But even though the impacts of U.S. crude have not yet been felt economically, Mark Mills, a senior fellow at the Manhattan Institute, argues that “in geopolitics, psychology matters as much as actual transactions.”
However, as U.S. crude oil begins to enter the markets, some experts have predicted that OPEC will not adjust their production too much to satisfy the rest of the world. At an event hosted by the Foundation for Defense of Democracies, Robert McNally, founder and president of the Rapidan Group, recently emphasized that OPEC does not want to be seen as the global leader of production cuts. Nevertheless Representative Joe Barton (R-TX) predicted that “the days of OPEC setting the price of crude oil are gone.”
“What we’ve done by repealing the export ban is put the U.S. producer in the driver’s seat. Quite frankly OPEC and Russia literally don’t know what to do,” Rep. Barton said. “So we’ve killed OPEC. It’s gone.”
Barton also argued that the U.S. is in a more powerful position today than ever before. Due to the rate of technological advancements over the past decade, America’s oil and gas reserves will continue to push the U.S. ahead of its competition.
America’s energy exports are continuing to grow and flourish in the global energy market. The demand for a stable source of energy has allowed the U.S. to place pressure on Saudi Arabia and Russia, threatening not only their financial standing, but also their political influence around the globe.