It’s a very exciting time in the world of oil geopolitics, if you’re a fan of juvenile saber-rattling in the service of making billionaires even richer:
The fracking boom has driven US output to the highest in three decades, contributing to a global surplus that Venezuela has estimated at 2 million barrels a day. That’s equal to or more than the production of six OPEC members…
Conventional oil producers in OPEC can no longer dictate prices, United Arab Emirates Energy Minister Suhail Al-Mazrouei said in an interview in Vienna this week. Newcomers to the market who have the highest costs and created the glut should be the ones to determine the price, he said.
“That is what OPEC is hoping for,” said Carsten Fritsch, a commodity analyst at Commerzbank in Frankfurt. “It’s the question of who will blink first.”
OPEC will feel pressure too, with prices now below the level needed by nine member states to balance their budgets.
The United States has been making it a matter of public policy to poison its own groundwater and stress its fault lines by fracking, steaming and acidizing for oil. This is partly in order to enrich its own oil magnates, and partly to stick its thumb in the eye of Russia, Venezuela and OPEC. The Hillary Clinton-led state department has only been too happy to strongly encourage shale gas fracking in Europe in order to frustrate Russian ambitions as well.
So OPEC has been flooding the world with cheap oil partly out of revenge, partly in a regional power play against Iran and others, and partly to disincentivize Western fracking by making it economically unfeasible.
It’s all good fun, and I’m sure the players feel like they’re doing great work to advance the interests of their “good people” against all those other “bad people” in those nasty other countries.
Of course, what almost no one is paying attention to in the middle of all this is the impact on climate change and the planet. We now know beyond a doubt that if all of this new shale oil comes out of the ground and gets burned into the atmosphere as CO2, the world’s youngest inhabitants may not have many habitable places left to live by their retirement age.
But that’s not so important compared to frustrating the economic ambitions of that rival nation-state, right?