Washington, D.C—As the repercussions from Saudi Arabia’s decision to raise production continue to be felt in the U.S. energy industry, Robbie Diamond, President and CEO of Securing America’s Future Energy, made the following statement:
“With a flick of a switch, Saudi Arabia has sent oil prices into a freefall—threatening bankruptcies and vast unemployment in the U.S. oil patch. After Saudi Arabia failed to get Russia to collude and manipulate supply in order to sustain higher prices, the Saudis are only now increasing supply in order to inflict serious harm on U.S. shale producers. The actions of Saudi Arabia will expose the U.S. economy to volatile oil prices based on decisions by foreign powers, which hurts domestic producers when oil prices are low and consumers when prices are high.”
The latest move by Saudi Arabia is reminiscent of the kingdom’s actions in 2014: Faced with competition from U.S. shale, the country maintained high levels of oil production that drove down the price of oil to just $26 by February 2016. During that period, more than 200 U.S. energy companies filed for bankruptcy, taking approximately 150,000 jobs with them.
North American energy exploration and production companies have approximately $86 billion in debt maturing over the coming four years—and 62 percent of those maturities are in junk bonds. Plummeting demand caused by the coronavirus has unexpectedly added further stress on the industry, with oil patch bankruptcies in 2019 jumping 50 percent on 2018 levels.
“The lesson for policymakers is clearer than ever: True energy dominance occurs when we have a choice of domestic fuels to power our transportation sector that do not swing violently based on decisions in far-off capitals. The United States requires a strategy that includes domestic production of oil and gas, the efficient use of those fuels, and critically a plan to diversify our transportation fuels so we are not dependent on a single commodity that is traded on an opaque and unfree market,” 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.