Washington, D.C.—As reports emerge of Saudi Arabia, Russia and OPEC+ agreeing to cut oil production, Securing America’s Future Energy (SAFE) believes the United States must decouple its economy from the boom-bust oil market cycle engineered by the cartel and led by Saudi Arabia to maintain its grip on the oil market.
“Saudi Arabia and Russia capitalized on the demand drop caused by COVID-19 to crash oil prices further and inflict even greater pain on the U.S. oil industry. We were powerless to stop this happening and were reduced to begging Saudi Arabia and Russia to cut oil production, so it should be clear by now that no matter how much oil we produce we will never achieve energy dominance,” said Robbie Diamond, President and CEO of SAFE.
The dominant oil producer thanks to large reserves and low production costs, Saudi Arabia leverages its advantage to induce boom-bust cycles in the oil market to maintain its leadership position. After reducing output to drive up prices and accrue more revenue, the kingdom then rapidly hikes production to flood the market and crash the oil price and drive newer entrants—like U.S. shale—out of business.
As the world’s largest oil consumer, accounting for one-fifth of daily global supply, the U.S. economy is particularly exposed to this volatility. With multi-year investment decisions predicated on oil market expectations, our automakers, airlines and energy companies suffer the most when oil prices rapidly change.
“Relying on a commodity dominated by countries that do not share our interests is no way to power the world’s largest economy. Rather than solely seeing domestic supply as the only solution to our energy security challenges rather than one important component, true energy dominance requires us to diversify our transportation fuel sources and use less oil. Doing so has the critical added benefit of strengthening our response to China’s attempts to own the next generation of transportation technology. It makes no sense for us to reduce our dependence on an unstable oil market, only to increase our dependence on China for our future transportation needs,” Diamond added.
About Securing America’s Future Energy
Securing America’s Future Energy (SAFE) is an action-oriented, nonpartisan organization that aims to reduce America’s dependence on oil. Near-total dependence on petroleum in the transportation sector undermines the nation’s economic and national security, and constrains U.S. foreign policy. To combat these threats, SAFE advocates for expanded domestic production of U.S. oil and gas resources, continued improvements in vehicle fuel efficiency, and transportation sector innovations including electric vehicles, natural gas trucks, and autonomous 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. Today, the ESLC is co-chaired by Frederick W. Smith and General James T. Conway (Ret), 34th Commandant of the U.S. Marine Corps.