Lost in the breathless media coverage of Iran and the Strait of Hormuz is a critical reality that too many politicians, activists and talking heads prefer to ignore: Record U.S. oil and natural gas production has helped keep a historic supply disruption from becoming a far worse price shock. American energy leadership still matters. And if we want it to keep mattering, we need to stop shooting ourselves in the foot.
Oil prices can move in seconds on a tweet or a missile launch. Tankers, refineries, pipelines, and the trucks that deliver fuel to your local station move in weeks. That is why lower crude prices do not instantly appear at the pump. A functioning physical market is not “price gouging.” That’s just reality.
Anyone who has spent five minutes around the actual logistics of the energy business understands this. The rest are either willfully ignorant or busy manufacturing outrage for the next election cycle.
Producing more energy is only part of the job — the process of getting that production to market is incredibly complex and capital intensive. Despite its current record production levels, the U.S. industry still faces myriad challenges amid government roadblocks and supply chain challenges.
New England still lacks adequate pipeline capacity to move natural gas when it is needed most, thanks largely to roadblocks set up by New York’s government.
Both West Texas and Appalachia continue to struggle with takeaway constraints even as the Permian and Marcellus basins keep setting production records.
California is steadily losing refining capacity thanks to a regulatory climate from Democratic Gov. Gavin Newsom’s government that treats energy infrastructure like a public enemy.
Without serious infrastructure investment and genuine permitting reform, all the abundance in the world cannot reach consumers efficiently.
You can have the greatest oil or natural gas field on Earth, but if you cannot move the product, the consumer still pays the price.
And yet some politicians in Washington and various state capitals are once again dusting off the same tired “solutions” that have failed every time they have been tried: windfall profits taxes and export bans. These are the policy equivalent of pouring sand in the gearbox. They would deliver exactly the opposite of what the politicians promise. Less investment. Less production. More volatility. Higher prices.
Capital is not patriotic. It goes where it is welcomed and stays where it is treated with a modicum of respect. Punish producers for success and they will simply invest less, produce less, and leave more of the market to Organization of the Petroleum Exporting Countries (OPEC) and other less friendly suppliers.
We have seen this activist/politician collaboration many times in the past. Every time global supply is threatened, the same chorus rises demanding that America “do something,” and that “something” invariably revolves around kneecapping its own industry. The lesson is simple and it has also been proven many times before: More American energy, stronger infrastructure, and continued access to global markets deliver lower prices and greater security than any combination of taxes, bans or industrial-policy fantasies.
The United States is the world’s leading producer of both oil and natural gas for a reason. That leadership did not appear by accident of geology or the benevolence of central planners. It is the product of free enterprise, technological innovation, risk-taking capital and — whenever policy allows it — a regulatory environment that does not treat every new pipeline or export terminal as an existential threat.
The shale revolution was not designed in a committee room in Washington. It was built by engineers, roughnecks and investors who figured out how to unlock resources others said were uneconomic. That same system is what is currently buffering American consumers and businesses from the full force of Middle East turmoil.
American energy leadership still matters, perhaps now more than ever. The only question is whether our policymakers will treat it as the national asset it is or keep using it as a political piñata every time the Middle East flares up.
The physical market does not care about virtue signaling or campaign rhetoric. It only cares about supply, infrastructure and the ability to move molecules from where they are produced to where they are needed. Everything else is noise that only serves to impede progress towards human flourishing.
David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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