It looks like the decade-old U.S. shale oil boom may keep us out of war.
Recall that when Iraqi President Saddam Hussein invaded neighboring Kuwait in August 1990, then-President George H.W. Bush led a coalition of countries against Iraq — though it was mostly a U.S. effort. The aerial attack began in January 1991, and Kuwait was quickly liberated.
Since Kuwait had been anti-Israel and not a strong U.S. ally, accusations immediately emerged that oil was the real motive behind the war.
Whether or not oil was the motive driving the U.S. effort, both access to it and the fear of rising oil prices almost certainly played a role. The U.S. economy and military readiness depended on importing Middle Eastern oil.
No more, and you can thank the shale oil boom for that.
Of course, the recent drone or missile attack on Saudi Arabian oil processing facilities, knocking out about 5 million barrels of production, wasn't a Kuwait-style invasion, but it's the kind of action that could lead to war.
If it does, trying to contain Iran's expansionist mischief-making and support for internationalism terrorism, not access to oil, would likely be the primary reason.
While access to foreign-produced oil is still important, it's simply not the economic threat it used to be. And you can see that in the impact on oil prices.
After the recent attack oil prices initially spiked, but markets often overreact and then settle down. And that's what's happening only a few days afterwards. West Texas Intermediate crude oil jumped from nearly $55 a barrel on Friday, Sept. 13, to nearly $63 on Monday but has since declined to about $58 per barrel.
What does that mean for consumers? Not a lot.
Prior to the attack the average nationwide cost for a gallon of gasoline was about $2.55, according to the U.S. Energy Information Administration. Analysts suggest gasoline prices could rise by … wait for it … 25 cents a gallon.
But Energy Information Administration says the current price is down nearly 30 cents from a year ago. So if gasoline prices do spike 25 cents, it would put us about where we were last September when there was no major confrontation in the Middle East.
What the shale boom has done is free the United States from dependency on Middle Eastern oil. In August 1990, when Hussein invaded Kuwait, the U.S. was producing about 7 million barrels of oil per day. Today, we're producing 12.4 million barrels per day.
Yes, we still import some crude oil, mostly from Canada. For the month of June, the U.S. imported 17.4 million barrels of petroleum and other liquids from Saudi Arabia versus 131.2 million barrels from Canada. And Canada has been sitting on a glut of oil, hoping to sell America even more.
Which raises an important point: Our current challenge isn't trying to find foreign sources for oil, but getting U.S. production from the wellhead to the refinery. And the most efficient and least expensive way of transporting oil to refineries is by pipelines.
That's why one of President Trump's responses to the attack on Saudi oil production was to urge the relevant U.S. agencies to expedite the pipeline approval process.
Environmentalists hoping to limit, if not end, U.S. oil production have taken to challenging pipeline construction — e.g., the Dakota Access and Keystone XL pipelines. Oil that can't be transported to refineries is oil that can't be consumed.
The recent attack on the Saudi facilities demonstrates, yet again, access to energy is a critical national security issue. Fortunately, a threat to peace in the Middle East, troublesome as that is, isn't a threat to the American economy and national security.