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Middle East Tensions Drive Gas Prices...Nowhere?

The price of a barrel of West Texas Intermediate crude oil jumped on news that a U.S. drone had taken out Iranian General Qassem Soleimani: from $61.18 per barrel on January 2 to $63.05 on January 3. It’s currently fluctuating around $62.63.
No one is surprised that the price of oil moved after the attack. What’s surprising is that it had so little impact.
According to AAA, the current national average for a gallon of regular gasoline is $2.585. A week ago, before the U.S. acted, it was $2.583. And a month ago it was $2.581.
In other words, drivers were paying about $2.58 for a gallon of gas in early December—and they still are.
Of course, we don’t mean to imply that the price of gasoline is the biggest factor surrounding the killing of Suleimani. It was a major foreign policy step, and we don’t know, and can’t know, all of the ramifications.
But they used to say that when the Middle East sneezed, the rest of the world caught a cold. What that meant was rising tensions in the Middle East forced oil prices up, sometimes significantly higher, which could have a major negative impact on economies around the world.
Today, Syria and Libya are failed states, Iraq is in chaos, and Iran has only limited oil production capabilities and export options, in part due to U.S. sanctions. And though another failed state, Venezuela, isn’t in the Middle East, it is part of OPEC and used to be a major source of U.S. crude oil imports.
Even the Iranian attack on Saudi Arabian oil installations last September had only a minor and short-term impact on crude oil availability and prices.
And the reason for this lack of oil-price volatility? The U.S. fracking boom.
It is impossible to overstate the positive foreign policy and economic impact of the fracking boom. In the past decade, the United States has become the dominant global force in energy production. We now lead the world in production of both crude oil and natural gas, and we increasingly export both products, easing the turmoil on our allies.
Environmentalists and the left decry this trend and have done their best to stop both production and export, arguing that we should be putting more resources into renewable energy. But their policies would make us energy-dependent, once again, on countries that don’t like us and are collapsing before our very eyes.
Middle East tensions can rattle energy markets, at least temporarily, but they don’t dominate markets—precisely because the United States now dominates them.