It’s entirely feasible for America to become a far bigger oil exporter, even one of the biggest.
Only a few years ago America’s policy makers were wringing their hands about “peak oil” and dependence on imported fuels. Now headlines feature the return of oil gluts. What happened? Saudi Arabia undertook a “stress test” of America’s oil-and-gas industry that produced unintended consequences.
We’re witnessing the first signs of a new normal in oil markets. Call it Shale 2.0, characterized by a potent combination: eager and liquid capital markets funding hundreds of experienced (now-lean) small to midsize companies that can respond to modest upticks in price with a velocity unseen in oil markets in eons—all using shale technology that is shockingly better than before and poised to keep improving.
This year sees the U.S. not only filling storage tanks to the brim but also exporting more than a million barrels of crude oil a day. Exports are at the highest level in American history, twice the previous crude export peak in 1958. The U.S. is exporting more oil than five of the Organization of the Petroleum Exporting Countries’ 13 members.
The stress test that brought this about began two years ago, when Saudi Arabia decided it would try to tame American shale oil and gas....
Mark P. Mills is a senior fellow at the Manhattan Institute, a faculty fellow at Northwestern University’s McCormick School of Engineering, and author of Expanding America's Petroleum Power: Geopolitics in the Third Oil Era. Follow him on Twitter here.
Photo by Getty Images / Spencer Platt