Previously, during the turbulence of oil exports in the\nMiddle East, the United States was in great pain as gasoline and other fuel\nprices soared.<\/p>\n\n\n\n
Costs could also rise in the coming weeks if Saudi Arabia\ndoes not quickly restore its oil production after a drone attack on one of its\noil fields. However, these days the US is no longer affected by these oil price\nshocks.<\/p>\n\n\n\n
The main reason, according to energy economists, is that the\ndecade-long boom in domestic extraction has turned the United States into the\nworld’s largest oil producer, and that will ease the US economy in new ways. It\nwill boost investment in rigs and pipelines and may create new jobs that put\nmore money into consumers’ pockets. The most valuable US oil exports will also\nhelp defend the country’s trade balance.<\/p>\n\n\n\n
Energy experts say higher fuel efficiency in US cars today\nwill also help ease price rises. Many Americans fear that rising US oil\nproduction will drain the country to reduce its use of fossil fuels and adopt\ncleaner energy sources. Climatologists say rising exports that help lower world\nprices could also spur other countries to maintain rushed oil and increase\ncarbon dioxide emissions, the main drivers of climate change.<\/p>\n\n\n\n
Economists say the failure to reduce trends in air warming\nwill create huge economic costs through floods, rising seas, damage to\nagriculture and other problems.<\/p>\n\n\n\n
The Obama administration previously estimated that every ton\nof carbon dioxide released into the atmosphere would produce about $45 in costs\nby 2020, a measure known as the social cost of carbon. Global carbon emissions\nare expected to reach a record 37 billion tons last year, up 2.7 percent. US\ncrude oil production has more than doubled since the mid-2000s, reaching an\nall-time high of 12 million barrels per day. The boom began after companies began\nto use hydraulic fracturing, and horizontal drilling to reach oil in shale\nrock.<\/p>\n\n\n\n
The rise has led to higher US exports of crude oil and\nrefined oil, and to lower imports. The United States has moved from importing\n60 percent of the oil it consumed in the mid-2000s to about 6 percent on a net\nbasis on Tuesday, according to the Federal Energy Information Administration.\nCrude oil imports from Saudi Arabia have fallen to around 600,000 bpd this\nyear, from around 1.5 million bpd in 2008.<\/p>\n\n\n\n
The boom in production was a key factor driving economic\ngrowth in the United States. In the first two years of the Trump\nadministration, the energy sector contributed to more than half of the rise in\nUS industrial production according to the Federal Reserve.<\/p>\n\n\n\n
When oil prices go up, companies are investing more in\ninfrastructure to boost production, said Jason Brown, the Fed’s policy and\nresearch official. Prices were not as clear as in previous years because\ncompanies operate more efficiently and require fewer workers.<\/p>\n\n\n\n
“We are less vulnerable to high oil prices negatively\naffecting the U.S. economy,\u201d. \u201cBecause of the domestic shale-oil-and-gas\nindustry, we\u2019re now more in a position to take advantage of that.\u201d Brown said.<\/p>\n\n\n\n
Yemen’s Houthi rebels have claimed responsibility for\nSaturday’s air strikes on Saudi Arabia that sparked fires in the oil giant\nAbqaiq and forced the kingdom to suspend more than half of its production. The\ncut, equivalent to 6 per cent of global oil supplies, has pushed up prices.<\/p>\n\n\n\n
Saudi Oil Minister Prince Abdulaziz bin Salman said on\nTuesday the kingdom had restored half of its suspended production and would\nreturn the rest by the end of the month. At the same time, they are exploiting\ntheir strategic oil reserves to ensure regular delivery to the global market,\nleading to lower oil prices.<\/p>\n\n\n\n
The big questions are: How long will the Saudis take to\nrepair Abqaiq and bring back production? The second really big question is:\nwhat happens next?<\/p>\n\n\n\n
The strike is fueling new tensions between the United States\nand Iran, with the Trump administration openly accusing Tehran of launching\nstrikes from its territory, although Yemeni rebels have claimed responsibility.\nIran has denied the accusation and warned of serious consequences if attacked.<\/p>\n\n\n\n
Although the suspension of production in Saudi Arabia has\nbeen one of the biggest developments in recent history, the market reaction has\nbeen more subdued than in the past.<\/p>\n\n\n\n
During the 1973 Arab oil embargo, Middle East producers\nstopped shipping oil to the United States and other countries as punishment for\ntheir support of Israel in the Yom Kippur War. This has led to a 350 per cent\nrise in oil prices, which has led to an economic downturn in the United States.<\/p>\n\n\n\n
The Iranian revolution in 1979 caused another spike, just\nlike the Persian Gulf and Iraq wars.<\/p>\n\n\n\n
Real liberation from oil and gas price shocks can occur only\nif the US replaces fossil fuels with renewable sources of energy. Wind, solar\nand hydropower are increasingly fueling US power generation, accounting for 17\npercent of electricity production last year, up from 13 percent in 2013,\naccording to the Energy Information Administration. Natural gas, coal and\nnuclear power represent the rest.<\/p>\n","protected":false},"excerpt":{"rendered":"
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