Since Sept. 11, 2001, the U.S. has become a dominant energy producer, yet cannot seem to break free from the unpredictable nature of the global oil market.
Even with the U.S. producing more of its own oil in 2018 because of the shale boom and fracking, it remains at the mercy of the global price of oil, as shown by federal oil analyses from 2002 to 2018 and recent actions by the Trump administration.
President Trump, like many of his predecessors, must still call on large OPEC oil producers, such as the Saudis, to avoid any uneventful price hike that could shoot up fuel prices going into a midterm election season.
On Monday, Sept. 10, 2018, Energy Secretary Rick Perry was meeting with Saudi Energy Minister Khalid al-Falih in Washington to discuss OPEC plans to keep supply steady, and urging them to forgo supply cuts, according to media reports.
Just like today, the fate of the global oil price was being deliberated in 2002 by the OPEC oil cartel.
“This doubt over a production increase from OPEC has also added some pressure on prices,” the Energy Information Administration said then.
And just like today, rising oil prices were also a factor of geopolitical instability, according to EIA. “Clearly, fears about a possible war with Iraq reducing global supplies of oil are reflected in the latest prices,” the agency said in a late August 2002 analysis.
In 2018, the concern driving the Trump administration to hold talks with the Saudis is not Iraq, but Iran. Specifically, it is anxious about the possibility that re-applying sanctions to Iran’s oil exports will drive up prices in a very tight oil-supply market with very little spare surplus available.
Iran has already begun decreasing its exports, which is sending prices upward.
In 2002, the U.S.’ own oil surplus was dwindling, which began to drive prices upward, similarly.
“One of the most discussed topics in the media today, besides the 2008 Presidential races, is the high price of oil,” a November 2007 report by the EIA read. “Crude oil prices have increased dramatically this year, with West Texas Intermediate (WTI) prices climbing from an average of nearly $55 per barrel in January to over $95 per barrel at the beginning of this month.”
But it was exactly that price point that made higher-priced drilling methods, such as hydraulic fracturing and shale oil, competitive, and eventually a boon for American energy production.
“Our energy security landscape has changed significantly since 9/11, having been impacted by global market dynamics, domestic policy, and technological innovation,” said Leslie Hayward, vice president at Securing America’s Future Energy, an energy security group made up of former military commanders and industry chiefs.
“At the time oil prices were approximately $26 a barrel and the historic run-up in prices that occurred in the 2000s would have been hard to anticipate,” Hayward told the Washington Examiner.
Oil prices began to move upward around the time the U.S. was marking the first anniversary of the terrorist attacks on Washington and New York by al Qaeda terrorists.
Going into the Labor Day weekend in 2002, the price of oil hit $30, which was a relatively big bump for the time, according to the Energy Information Administration’s weekly analytical reports from 16 years ago.
But it was after prices hit the $100 per barrel barrier that the U.S. made major strides in energy security, Hayward said, both because high prices made the shale patch economical and because they prompted federal action to tighten federal fuel-economy requirements to move the automakers toward making more cars and trucks that conserve fuel.
Former President George W. Bush favored federal action to develop a hydrogen car for security purposes, to wean the country off its “addiction” to foreign oil.
“However, as oil prices have moderated, complacency has become the predominant feature in the current policy landscape, and we risk losing some of the progress that has been made in the nearly two decades since Sept. 11 occurred — including the current move to freeze fuel economy standards and policy stagnation for the deployment of alternative fuel vehicles,” Hayward said.
