Washington, D.C.—Ahead of tomorrow’s meeting by the Railroad Commission of Texas to consider prorating oil production in the state, Securing America’s Future Energy (SAFE) President and CEO Robbie Diamond submitted a letter urging against the practice. The letter calls upon the Commission to consider the long-term energy security consequences of such a decision.
In the letter, he states, “While output reductions may provide short-term relief, they will not cure the significant global impact on oil demand driven by COVID-19, and the long-term consequences of this approach are likely to have profound adverse effects on our nation’s energy security goals.”
The letter further adds that engaging in practices similar to those of OPEC itself would undermine American attempts to enforce antitrust actions against the cartel, and give both it and OPEC+ counterparts like Russia greater license to continue manipulating the global oil market at American expense.
“SAFE believes we ought not respond to manipulation of the oil market by engaging in government-led market manipulation ourselves,” Diamond added, noting that prorating would not cure the structural deficiencies in the oil market, which allow it to be dominated by the cheap oil of OPEC and Saudi Arabia in particular.
Rather than take measures to placate the cartel, the letter concludes that the United States should look beyond the current crisis—and take a more proactive stance that instead raises the cost to countries that engage in continued oil market manipulation.
“The cartel has a plan used over these decades to induce boom-bust cycles designed to harm our American economy by withholding output to drive up prices and accrue revenue, then sharply increasing production to crash the price of oil to harm the domestic oil and gas industry, eliminating competition and cementing Saudi Arabia’s grip on the global market,” Diamond adds.
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.