Energy Security and Geopolitics

Over the past 50 years, the United States has too often relied on foreign oil to fuel American families and small businesses. However, since the beginning of the shale revolution in the United States, American reliance on overseas oil has steadily decreased. It hasn’t always been like that, which is why it is important to maintain our country’s self-reliance on domestic production to keep crude prices low so Americans can enjoy the benefits of affordable energy, such as low gasoline prices.

There are several factors that affect the price of gas at the pump. These include federal, state and local taxes, refining costs, and marketing/distribution. However, the price of crude oil plays the biggest role. Crude oil is the main ingredient in gasoline and therefore, gas prices are directly tied to crude prices.

Unless we make full use of American energy resources here at home, United States gasoline consumers will again be vulnerable to political developments that unfold around the world. This dynamic has played out repeatedly in our nation’s history, with several examples from recent decades that led to significant pain for Americans at the pump. During these price spikes, many Americans, including those living at or below the poverty line, were forced to choose between paying rent and fueling their cars to commute.

A leasing ban or failure to issue federal permits on public land and waters would force the U.S. to import the displaced oil from other mineral-rich countries. It would also undermine our position as the world’s largest oil and gas producer, which insulates our economy from the price shocks that we suffered for decades when we relied on foreign nations for our energy needs.

American production means geopolitical turbulence or price manipulations don’t turn into higher prices at the pump and all across our economy. Currently, about 22% of US oil production and 12% of natural gas production takes place on federal lands, according to SP Global, with 60% of the country’s permits in one of the poorest states in the nation – New Mexico, which heavily relies on the revenue to meet state budget requirements. Federal waters-based development accounts for roughly 15% of total oil production and roughly 3% of natural gas production.

Worse, it will harm our position as the world’s biggest reducer of emissions.

Sources: Verisk Maplecroft and Wood Mackenzie