The unexpected shale revolution in the Permian Basin keeps surprising observers and even many insiders. Who would have predicted a few years ago that “Texas Shale Oil Has Fought Saudi Arabia to a Standstill,” as Britain’s Telegraph headlined a story last summer? And who would have predicted that a revival of the long moribund Permian would dominate the national upsurge in shale accounting for roughly 75 percent of the growth of the global supply of oil?
And who would have predicted the rapid resilience of Permian production in response to the steep plunge in oil price that began in the summer of 2014? Painfully bruised but not collapsed, many producers have rapidly decreased the cost of production while increasing output. And perhaps the most profound development in the long term: Permian oil is leaving Texas ports in route to our allies in Europe now dependent on oil and natural gas from Russia and the Middle East.
For the first time in more than 50 years, the world oil market tilts toward the United States rather than OPEC — a 65-year-old cartel of nationally owned oil companies (NOCs), many of which are in economic meltdown, ravaged by war or inimical to the most fundamental values of our country. And radical Islamist terrorism — the greatest threat to our Judeo-Christian civilization — depends on petrodollars to fund its barbaric campaign. In this literally “fractured” global arena, Permian oil production is poised to play a geopolitical role no less beneficial than what the basin contributed to the Allied victory in WWII — a story worth recalling.
After the D-Day landings on the beaches of Normandy in 1944, Gen. George Patton began racing his troops across France toward the German border. Speed was essential but the drive eventually stalled when fuel ran out. The Permian producers rose to the occasion and against all odds produced the fuels for emergency air lifts to Patton’s forces in France. Permian crude literally fueled Patton’s penetration of the German border, defeat of Hitler and liberation of Europe from the clutches of the Third Reich. Overall, the Allied armies of WWII consumed over 7 billion barrels of oil and the majority of that fuel came from Texas.
For the first time since WWII, we have access to energy resources that would allow the United States to operate as the world’s energy superpower — but as an ethical superpower under the rule of law. After the last eight years of an Administration that snubbed our allies and abetted our adversaries, our shale bounty could peacefully support a geopolitical re-alignment strengthening the alliance of freedom loving nations and weakening the global clout of rogue nations that deny basic human liberty.
On multiple levels, the shale revolution is not only a game-changing geological and technological victory. The breakthrough is also a victory of free enterprise — of thousands of free people working in small and mid-sized energy companies. In stark contrast to OPEC’s ministers of oil, the U.S. shale industry operates in a competitive free market on private and state land in the only country in the world that recognizes private property rights in subsurface minerals. Instead of the NOCs’ centralized plans, the upsurge in Texas shale is the result of continual innovation that enhances drilling technologies and applies high-tech data analytics reducing costs faster than imaginable two years ago.
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“Fueling Freedom: Exposing the Mad War on Energy” Book Talk/Signing & Reception with authors Kathleen Hartnett White and Stephen Moore
5-7 p.m. Wednesday
Green Tree Country Club
The opportunities in the Permian Basin are prodigious but the head winds are daunting. Ironically, the shale bonanza has coincided with a presidency bent on eliminating fossil fuels. Programs to cut carbon are now spread across the federal agencies. Just a week ago, the feds announced civil aviation across the world agreed to go “carbon neutral.” And the United Nation’s much touted Paris global climate agreement “entered into force” on Oct. 7. Danish economist Bjorn Lomborg estimates that if fully implemented, this climate deal would cost more than $100 trillion in lost GDP but would only reduce predicted warming by 0.3 degrees Fahrenheit. Such is the “mad war on energy” exposed in my and Steve Moore’s “Fueling Freedom.”
The current administration has set our country on a climate crusade when there are no alternative energy sources capable of providing the countless goods and services that fossil fuels handily provide. Yet, in part because of shale gas, the U.S. has reduced CO2 more than any nation without any prodding from President’s Climate Action Plan.
Amidst these mad energy policies, the tragic loss of jobs and bankruptcies caused by OPEC’s desperate attempt to quash the rise of U.S. shale, the energy prize remains intact. We now have access to the source rock and, if not quashed by regulation, to continual innovations that cut cost while increase output. Slowly but steadily, rigs are returning to the Permian’s shale fields.
Determined, free, creative, courageous men and women — exemplified throughout the Midland community — have achieved what seven presidents promised but failed to achieve: energy independence as an option. The shale revolution is a result of the Permian rock and the people making thousands of individual decisions in pursuit of profit within a competitive market. It looks like Adam Smith’s “invisible hand” — the free market — has also replaced the autocratic bullies of OPEC without so much as a single skirmish.