The relatively minimal global market reaction to an attack 2 months ago on Saudi Arabian oil facilities reflects how much US energy policies have improved in recent years, a US Senate Intelligence Committee member said on Nov. 7. “On the first day of trading after the attack, prices rose sharply to the highest single-day crude oil price in the last decade. But it was short-lived and soon dropped to below predisruption levels just 2 weeks later,” Sen. John Cornyn (R-Tex.) said.
“What was so remarkable about this attack was how unremarkable its impact was globally. When the world suffered its largest oil supply disruption in decades, its impact was relatively muted. Several factors led to this tiny ripple,” he said in remarks at the Center for Strategic and International Studies.
The 1973 Arab oil embargo “was a hard dose of reality” for an America that relied heavily on imports while discouraging production, and the federal government responded by imposing price controls and banning exports of US crude, Cornyn said. “Hydraulic fracturing and horizontal drilling have dramatically increased the production of American oil and gas. In short, the shale revolution reversed the tide of the energy landscape in our favor,” he said.
“Doing away with outdated protectionist policies didn’t just propel the US economy. It provided the fuel needed to strengthen our alliances around the world,” Cornyn said. “But when our allies are looking at our adversaries for basic needs such as heating and electricity fuel, that’s obviously a problem. It’s a strategic vulnerability not only for those countries, but also for the US.”
Russia still is the dominant natural gas supplier to much of Europe and its market share continues to grow, Cornyn warned. “Last year, Russia supplied 37% of the gas in Europe, up 7% from 2014. Of course, none of this is lost on our friends in Europe. They understand how vulnerable this makes them, so these countries have been working to diversify their energy supplies and build a strategic gas interconnector between countries that likewise rely on Russia for gas,” Cornyn said.
Working to diversify
He noted that in 2018, Russia supplied 37% of the gas Europe consumes, up 7% from 2014. “Of course, none of this is lost on our friends in Europe. They understand how vulnerable this makes them, so these countries have been working to diversify their energy supplies and build a strategic gas interconnector between countries that likewise rely on Russia for gas,” Cornyn said.
“Reducing European countries’ reliance on Russia and other rogue nations for their energy needs isn’t just a win for America. It’s a win for global security. It has allowed us to provide cheap, reliable energy to other countries for their citizens,” he said.
Cornyn noted that while it’s easy to take affordable, reliable energy for granted in the US, that’s not the case in countries like India that are trying to keep pace with growing demand. “Huge swaths of the population still lack reliable access to energy, so they burn cow dung, coal, wood pellets, or other high-emission sources. We now are helping them by providing cleaner, more reliable energy to one of our closest partners in that part of the world,” he noted.
Asked whether the country’s energy abundance puts it in a position to start addressing global climate change, Cornyn said he continues to support an all-of-the-above US energy policy but opposes more dramatic steps outlined in the Green New Deal which he believes would derail progress that has been made toward achieving global energy security.
“It’s important to remember we can support natural gas and oil and innovation and conservation. What we’ve seen time and time again is that American entrepreneurs have found ways to innovate their way out of problems, and I have every confidence we can continue to do so. They are not mutually exclusive. We have the power to harness American ingenuity and craft more energy policies that will secure our place as the global leader in energy innovation,” he declared.