Washington, D.C.—Securing America’s Future Energy (SAFE) today released an Issue Brief analyzing the effects of Saudi-led OPEC’s impact on volatility in global oil markets, and exploring the Kingdom’s policy options ahead of this month’s OPEC meeting.
The negative impact of Saudi Arabia’s production policies on the U.S. shale industry has been well-documented. This Issue Brief addresses how OPEC pressure on U.S. production could continue, contributing to increased price volatility and uncertainty in the long term despite OPEC’s provisional agreement to cut production in September.
Yet, despite Saudi Arabia’s success in reducing American shale production, this report—part of a series produced by SAFE on the future of OPEC—finds that the Kingdom’s policies have caused rifts within OPEC, threatening the cartel’s cohesion in the future.
The report also finds that domestic issues within the Kingdom could contribute to internal instability with potential impacts on global oil markets. This includes government attempts to introduce controversial subsidy reforms, the ongoing potential for Shi’a unrest in the oil-rich Eastern Province, and rumors of internal disputes within the Saudi royal family.
“Our continued oil dependence means our national security and economic well-being are highly vulnerable to the actions of other nations, posing an acute threat when those actions are designed to manipulate the global oil market,” said SAFE President and CEO Robbie Diamond. “The fact that the domestic interests of a nation on the other side of the world can affect the prices at the pump for U.S. consumers, or put pressure on American jobs, serves as a stark reminder of this.”
“However, the United States has the potential to vastly reduce our oil dependence. Through increased domestic production we can reduce our imports of oil from the Middle East, but that won’t insulate our economy from price volatility. The only true solution is by breaking oil’s monopoly over our transportation system, which can be achieved through increased efficiency, and advanced transportation fuels like electricity and natural gas,” Diamond added.
Congressman Kevin Cramer added that the domestic interests of OPEC members, particularly Saudi Arabia, influence both the supply and prices of oil worldwide, directly affecting American producers and consumers.
“The ability of a small group of nations to disrupt U.S. economic and national energy security through supply manipulation should be a matter of concern, especially as OPEC’s actions hurt American production.”
Rep. Cramer is an original cosponsor of HR 4559, alongside Rep. Trent Franks (R-AZ) and Rep. Collin Peterson (D-MN), which would create a commission to investigate whether OPEC’s actions to manipulate oil supplies is aimed at hurting U.S. producers.
About Securing America’s Future Energy (SAFE)
Securing America’s Future Energy (SAFE) is a nonpartisan organization that aims to reduce America’s dependence on oil and improve U.S. energy security to bolster national security and strengthen the economy. SAFE advocates for expanded domestic production of U.S. oil and gas resources, continued improvements in fuel efficiency, and in the long-term, breaking oil’s stranglehold on the transportation sector through alternatives like natural gas for heavy-duty trucks and plug-in electric vehicles. In 2006, SAFE joined with General P.X. Kelley (Ret.), 28th Commandant of the U.S. Marine Corps, and Frederick W. Smith, Chairman, President, and CEO of FedEx Corporation, to form the Energy Security Leadership Council (ESLC), a group of business and former military leaders committed to reducing the United States’ dependence on oil.
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