Washington, D.C.—As Saudi Arabia ramps up production and slashes prices in the wake of OPEC+ failing to agree on supply manipulation and the subsequent 30 percent drop in oil prices, Securing America’s Future Energy (SAFE) President and CEO Robbie Diamond made the following statement:
“American oil consumers and producers are only bystanders as Saudi Arabia continues to play with the oil market, whether they try to make the price go up or drive the price down. Saudi Arabia claims to be the swing producer to stabilize the market, but mostly they just cause swings that hurt the free market and the ability to compete. The loser in this current price war is the American oil industry—a sector that was already drowning in debt and suffering under the coronavirus. Our industry and the U.S. economy has no choice but to watch once again as Saudi Arabia tanks the price of oil to suit its domestic priorities.”
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.
“For the United States to rely on such a volatile oil market, which is manipulated by countries that share neither our priorities nor our values, is absolutely no way to power the world’s largest economy. This must serve as a much-needed wake-up call to diversify the fuel sources in our transportation sector, with diverse domestic fuels, as a matter of urgency so we are no longer dependent on oil and the global events and market manipulation that influence prices. Luckily, the technology exists if we finally choose to support the deployment of electric, natural gas, and hydrogen vehicles,” Diamond added.
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.
Diversifying our transportation system would enhance U.S. energy and economic security by reducing America’s exposure to the volatile global oil market.
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.