Drill baby drill

Trump’s domestic energy boom is lowering oil prices globally

By —— Bio and Archives--December 12, 2017

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Trump's domestic energy boom is lowering oil prices globally
There are actually people who think it’s a bad thing if oil prices drop, and this includes people in the American foreign policy establishment. They worry that low prices will “destabilize” (they use that word a lot) geopolitical structures and force the long-time status quo into question.

They’re half right. Low oil prices can do all of this. But where they’re wrong is in thinking it’s a bad thing.

Since taking office, one of President Trump’s most important policy decisions has been to take the shackles off U.S. domestic energy production, which we’ve told you before has had the effect of strengthening the U.S. position in global energy markets while lowering prices worldwide. Now we’re seeing another impact of this policy. Many of the bad actors of the world, who depended on artificially high oil prices to fund their regimes, are in a world of hurt:

The consequences reverberate in the Middle East and beyond. Future oil revenues to countries like Saudi Arabia, Iran, Venezuela, Russia and Iraq will fall trillions of dollars short of what once might have been expected. The shift in energy markets will benefit consumer economies like Japan, China, India and the nations of the European Union. The U.S. and similarly situated nations, like Australia and Canada, can look forward to faster growth and greater foreign investment, since they will capture much of the oil revenue that Russia and OPEC lose.

Low energy prices already have given the EU’s struggling southern countries a chance to return to growth. They have limited Russia’s prospects and forced Vladimir Putin onto a tight budget. They have largely offset the gains Iran had hoped to make from signing the nuclear deal and escaping Western sanctions.

But the greatest consequences are being felt in the Arab world, where the long-term decline in oil revenues threatens the stability of many states. It is not only the oil producers that will suffer; the prosperous Gulf economies have been a major source of opportunity for Egyptians, Pakistanis, Palestinians and many other Middle Easterners.

The shining cities that rise where the desert meets the Gulf may be in for harder times. The sheikhdoms’ glassy skyscrapers, gleaming malls and opulent apartment complexes were conceived for a world in which runaway energy demand and limited sources (remember “peak oil”?) led to inexorably rising prices. These fragile and artificial economies require hothouse conditions that a weakened OPEC can no longer provide. Now the great Gulf Bubble seems set to slowly deflate.

There’s more. The staggering affluence of the Gulf countries during the OPEC era concealed the Arab world’s failure to develop states and economies capable of competing effectively in the 21st century. As their dream of revival through oil riches fades, they are waking to a new era of weakness and dependency.

If there’s a cloud to this silver lining, it’s the maddening realization that this could have happened decades ago if only there was the political will to make it happen. U.S. politicians of both parties have long been cowed by the shrieking hysterics of the environmental lobby, which cries that the planet will be destroyed by fracking or pipelines or whatever. That’s made it hard not only to drill for oil but to build the infrastructure and refineries necessary to get our energy resources to market across the globe.

Barack Obama was the worst offender, using unconstitutional executive orders and outrageous administrative delays to prevent oil development companies from moving forward with long-planned projects. But before Obama came along there were members of Congress in both parties who stood in the way of America unleashing its energy resources. George W. Bush and Dick Cheney tried, but there were too many cowards in the Republican Congress of that era to allow it to happen.

Trump has had little to no Republican resistance to sensible energy policies, and he has decisively taken advantage of the opportunity. Hopefully we’ll move the ball forward further with the final passage of a tax reform bill that should include opening up the Arctic National Wildlife Refuge to drilling. It was in the Senate version of the bill and we can pray the House agrees to keep it in.

In the meantime, bad guys from Russia to the Middle East to Venezuela are suddenly struggling to come up with the cash they need to pursue strategic advantage on the world stage, all because America decided to stop leaving its oil in the ground and artificially depleting supply.

To be sure, there will be some U.S. oil companies who will see their profits tumble if prices stay low, but in a free market it’s not our problem to be concerned with that. More competition is good for consumers and those who provide the best value while controlling their costs can make money selling oil at market prices. Those who can’t don’t deserve to stay in business.

The left often complains that the oil industry gets “subsidies,” although that really refers to tax breaks available to most other industries. The real oil subsidy is the one that jacks up prices by gutting supply, and that’s been the left’s modus operandi for years. Trump has now put a stop to it, and it’s driving U.S. economic growth while weakening many of our enemies.

Maybe Donald Trump does know a thing or two about how to play this game.

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Dan Calabrese -- Bio and Archives | Comments

Dan Calabrese’s column is distributed by HermanCain.com, which can be found at HermanCain.com

A new edition of Dan’s book “Powers and Principalities” is now available in hard copy and e-book editions. Follow all of Dan’s work, including his series of Christian spiritual warfare novels, by liking his page on Facebook.

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