Oil’s Unbelievable Fall Must Spark US Energy Dominance Rethink
The unthinkable has happened. Not only did the price of oil fall below zero, but U.S. benchmark West Texas Intermediate (WTI) was trading at -$37.63 per barrel. These previously unimaginable prices must provoke policymakers to reexamine what American energy dominance looks like, as it has become abundantly clear once again that the U.S. economy is reliant on a commodity that we cannot control and is manipulated by countries who do not share our interests or values.
These events have shone a harsh spotlight, in the starkest terms, on the vulnerability of the U.S. in an unfree oil market that is dominated by OPEC+ market manipulation, led by Saudi Arabia and its vast reserves of cheaper oil, for a commodity so essential to powering our economy.
Despite recently becoming the world’s largest producer, the U.S. oil sector has been powerless to arrest an alarming slide in prices due initially to COVID-19, but then accelerated by the Saudi-Russia price war.
The inability to cure oil’s staggering slide should puncture any notion that we can drill our way to energy dominance as we have been told over the last few years.
To pursue true energy dominance, we must combine our domestic oil production with efficiency measures that ensure we extract as much economic value as possible from the oil that we do use and also by diversifying fuels for transportation, providing consumers and businesses a real choice.
We have a truly dominant set of resources and fuels in the U.S. from wind, solar, natural gas, nuclear, coal, and even oil, but the problem is that our transportation sector is effectively entirely dependent on oil—a global commodity that is traded on an unfair market by countries that have cheaper production costs and play by a different set of rules.
Winston Churchill once claimed that “safety and certainty in oil lie in variety, and variety alone.” The U.S. should be using this diverse set of domestic fuels not priced on a manipulated global market to power its cars and trucks when the country gets moving again after COVID-19. We must accelerate the deployment of advanced fueled vehicles like electricity, natural gas, and hydrogen. The precipitous drop in oil prices caused by both demand destruction and directed action of OPEC+ partners does not just hurt the domestic shale industry but is also targeted at evolving technologies such as electric vehicles (EVs), just as sales and deployments are starting to take off.
We must also protect and accelerate that growth so that the most critical manufacturing industry in the country—our auto and truck makers and their suppliers—can lead the worldwide transition to this technology-driven transportation future. From minerals to markets, China has moved swiftly to secure the global EV supply chain. If we do not respond, we risk merely swapping today’s dependence on an unstable oil market for a future reliance on China to fuel our transportation needs.
COVID-19 and the Saudi-Russia price war has exposed America’s energy security vulnerabilities, and it would be disastrous if we let the Saudis and their OPEC allies maintain dominance over our transporation needs. The damage would be irreparable if we also end our commitment to our future transportation technology. We simply cannot allow China to make us dependent on another outside supply chain.
We are an energy superpower but can only truly dominate by embracing all American fuels for transportation and mobility. As we enter a bleak period in our energy security, we would be wise to remember the Churchillian lesson of security through diversity.
General James T. Conway is the 34th Commandant, U.S. Marine Corps and Co-Chair of the Energy Security Leadership Council, a project of Securing America’s Future Energy.
Robbie Diamond is the President and CEO of Securing America’s Future Energy.