Why you should beware low oil prices
For the past few years, there has been a movement in America to become energy sufficient. This means no more oil imports, and for the first time in year, oil exports. With technological advancements, there has been a Natural Gas boom in America, and lots of new companies have sprung up as a result. In September 2013, Governor Bobby Jindal spoke at the Heritage Institute about America Next, a think tank with the goal to better articulate the conservative mission. Part of this mission is to make America an “energy superpower.”
American Next wrote in their downloadable document on the energy power America has yet to tap into, writing,
“American energy resources and energy technologies are the envy of the world. We have more oil, natural gas, and coal resources combined than any other nation in the world. Our technological innovations on newer and alternative sources of energy from win, to solar, to biofuels are the most advanced in the world. These are not wild eyed theories, these are the facts.”
The brochure continues that energy is ready for a “golden age of energy,” and this includes cheap energy prices. For the economy, they state, “energy has created millions of jobs for the American economy. Consultants at PwC report that the oil and gas industry supports over 10 million jobs across the economy.”
So, while international oil sales are the lowest they have been in 12 years, this is not entirely a good thing. There are conspiracy theories floating around the internet that Saudi Arabia, which benefits greatly because of the oil they sell, is purposefully increasing oil supplies in order to drop the prices, and therefore, take out any new small businesses. If oil becomes easily affordable, Middle Eastern superpowers will no longer be able to fund the luxury business market, and their country will be full of old Ferraris lost in the sand. This does not even take into account the Iran Deal, which will lift sanctions and allow the country to once again export oil on the world stage.
As the American energy momentum really starts to take off, this may not be the best news for the industry. Other blocks, such as the Keystone Pipeline’s failure to pass, is more red tape that stops the creation of thousands of energy jobs. With states like Texas and North Dakota, which rely so heavily on oil and gas and have been booming, the effects of this market change will hit home. And just as President Obama announced in his SOTU that the economy is doing better than ever, the market this week does not reflect his statement.