Point of View: Domestic oil production gives U.S. upper hand
The United States faces two urgent geopolitical dilemmas in countries whose economies are dominated by oil and gas production. The Department of Defense is always planning for two simultaneous wars to ensure the United States is prepared to fight. We are currently facing the geopolitical and economic equivalent, and it is the strength of our domestic oil and gas industries that have enabled the United States to confront these countries with almost no impact at home.
Both Iran and Venezuela sit on large oil and gas reserves and both have played significant roles in the global energy markets. Iran also calls regularly for the destruction of the United States and holds American citizens hostage. It promotes terrorism in the Middle East and elsewhere and has nuclear ambitions. Venezuela’s socialist government has shut down all opposition, killed protesters and is systematically starving its own people and denying them medical care.
Iran has the ability to produce more than 4 million barrels of oil per day and export at least 2.4 million barrels of oil per day. Even with the host of technical problems Venezuela’s oil industry has been experiencing in recent years, it has the ability to export more than 1 million barrels per day — much of that to the United States. Without U.S. intervention, both countries would be major oil exporters, which would be strengthening and emboldening their dangerous regimes.
Ten years ago, our options to counter these countries would have been much more limited. In 2009, domestic U.S. oil production was 6 million barrels per day, only half of what it is today. The United States was importing more than 3 million barrels of oil per day for domestic consumption. Today, our consumption has risen but, because of increased domestic production, our imports have dropped 17 percent.
Just three years ago, the United States still prohibited almost all oil exports under a 40 year ban intended to protect a scarce domestic resource. Today, with booming production, we export from 2 million to 3 million barrels per day, stabilizing the global market. America’s strong and growing energy production gives the United States the freedom to employ economic sanctions on the one product that can make a difference to the Iranian and Venezuelan regimes.
Before the American oil production renaissance, Venezuela and Iran were protected by their oil production. The United States was limited in its ability to pressure these rogue nations without creating wild spikes in the global price of oil. Such spikes would damage the U.S. economy and draw the ire of U.S. consumers. Thus, America’s foreign policy options were limited to rhetoric, military action and minor economic sanctions implemented as part of a coalition of nations.
Now, the United States can — and does — employ harsh sanctions as a foreign policy tool, and oil prices for U.S. consumers barely budge. In fact, oil prices fell a month after the implementation of the Iran sanctions and gasoline prices were hardly affected when all oil imports from Venezuela were banned.
The United States is not energy independent and never will be. However, higher domestic oil and gas production have brought the U.S. greater geopolitical freedom to act without military intervention. The United States now has the energy security that enables us to act against two major oil producers on two continents without creating a scare in the markets.
The administration is using American energy strength to pressure Iran and Venezuela, but it's a tool that future administrations will hold as well — as long as American oil and gas production continues to flourish. Whereas Iran and Venezuela might have been protected by their oil 10 years ago, the United States is now empowered to counteract their regimes with biting economic sanctions. No longer does the United States have to excuse or even endorse behavior it despises from despotic regimes simply because of their oil.
We must have the power to stand up to destabilizing and dangerous regimes at times, without resorting to war. Today, America’s domestic oil and gas industries are empowering us to do just that.
Ellen R. Wald is a senior fellow at the Atlantic Council’s Global Energy Center and president of Transversal Consulting, a global energy and geopolitics consultancy. She wrote this for InsideSources.com.