Just over a month ago (right before a Monday Holiday travel weekend) the left was freaking out over the price of a gallon of gas. It was rising, and a Democrat wasn’t president. Fuel for political propaganda.
The Democrats used it to salvage Nancy Pelosi’s optically incompetent ‘crumbs’ narrative. Look! Gas prices are swallowing up those crumbs from tax reform we told you about, and it’s all (Trump’s) fault.
If there were a way to tie gas prices to separating families or
abortion Women’s Health Care™, they would have made it. Maybe they will. And it won’t be long before racism is involved. But who needs those when you can just brush off your Trump Derangement Syndrome and parade it on a cable news channel.
Rising gas prices were Trump’s fault. He also burned their toast, spilled their latte, and caused them to miss part of a hangnail on the big toe of their collective left foot, and it hurt like hell.
As with each progressive narrative they marched out in front of their media allies and made their best Darth Vader impression: ‘I have you now.‘
But then the reality of the new global oil economy came flying in like Han Solo and ruined it.
Gas prices stopped rising. They dipped a bit and then hung there.
When the world blinked Democrats moved on to the next trick, but there are details involved with which you may want to become familiar because OPEC, like the Democrats, have something of a civil war on their hands,
Iran wants to continue increasing its own production yet wants OPEC to maintain the group cuts. Iran also faces the backlash of sanctions on exports. Today, the US exports more oil than Iran.
Saudi Arabia and Russia have the lowest production costs and stand as the ones to gain more from a moderate production increase. Oil prices will not collapse and they will sell more oil.
The winners from this carefully designed agreement are Saudi Arabia, Russia, and the Gulf countries. Those who enjoy lower costs and can generate higher revenues from improved exports. The agreement sets production higher but no individual quotas, so improvement in output is left to the countries with the highest excess capacity.
Iran, Venezuela, Ecuador and other countries that have production and geopolitical problems suffer the most.
OPEC cut production, but every time that happens the Shale Oil folks get to work filling in the gaps. They are looking for ways to cut their costs. Methods to more efficiently spin up or down based on need.
OPEC doesn’t do that.
The challenge from now on for OPEC and for oil producers is not to seek artificial price inflation, but to improve efficiency. OPEC cannot stop disruptive technologies, such as the electric car, and needs to stop thinking about oil prices by looking at the past, but to pursue cost efficiency and the diversification of their economies.
The big problem with OPEC is that when prices went up they became accustomed to an unjustified oil revenue and when they went down they faced huge deficits from unsustainable subsidies.
You know who that reminds me of, Democrats.
Unlike the Left shale oil producers want to find ways to be efficient and productive. Tools that provide them a profit and America with a valuable asset. The ability to stabilize energy prices which takes a lot of the geopolitics and political pressure away from the commodity.
As I’ve noted before Shale is our new strategic reserve and its massive. A resource that makes us less dependent on foreign sources, most of whom are willing to hate us if they don’t already. A Resource the Democrats want left in the ground.
A resource that drove Saudia Arabi to flood the market to wipe out shale oil because it was a threat to both their lopsided financial and political power on the world stage. A tactic that dropped the price of oil from over $100.00/barrel to just over 40.00.
Yes! The only reason a gallon of gas is this cheap to begin with is the threat shale oil represents to OPEC’s lords and masters. The rise of a technology that Democrats have smeared and suppressed both in the press, media, film, and with statutory force.
And here they are complaining about gas prices ticking up into a range that’s at least a dollar cheaper per gallon than the price they ignored while Obama was busy helping them keep it in the ground.
Oil prices should/will probably rise a bit more as inventories seek their happy medium but the days of third world emirates civil wars and the imposition of sanctions on producers like Iran shocking consumers at the pump seem less likely. Thanks to shale oil and Republicans and Donald Trump.
Its ability to start and stop production in response to price swings makes it an excellent brake on runaway energy prices and runaway political pressure from foreign governments. It gives us leverage over them.
Shale oil can offer Americans both economic and national security. An argument any Republican for elected office could make should they feel inclined. Right after they point out that Democrats are being disingenuous about the price of gasoline. Like everything else, this is a political issue irrespective of its effect on actual people or their lifestyles.
And the Democrats will do everything in their power, if we give them any, to turn the clock back on Shale oil. They will purposefully put OPEC back in charge and that will cost you a lot more than a few bucks at the pump.
This should surprise no one.
Economics, however, surprises Democrats all the time which is yet another reason why no one should allow them to put their hands on the levers of power. And certainly not in control of anything having to do with spending your money.