Economists say the United States is in the process of passing Russia and Saudi Arabia to become the world’s largest oil producer. This means less dependence on oil imports, stronger economic growth, and more latitude in dealing with political problems with Saudi Arabia and the rest of the Middle East.
The growing use of advanced oil extraction techniques like “fracking
” is boosting U.S. oil production sharply, according to the American Petroleum Institute’s Chief Economist John Felmy.
He says experts are still toting up production figures, but the United States is either the world’s largest oil producer or soon will be. Felmy says the increase in domestic oil and gas production has sharply cut the proportion of U.S. oil demand that must be met by imports.
“Thirty five to 40 percent net basis, so that is a significant decline from 60 percent,” he said.
The president of Strategic Energy & Economic Research, Michael Lynch, says rising oil supplies put downward pressure on oil prices, boosting U.S. economic growth.
“Consumers would have more money in their pockets after paying for gasoline and other things, inflation should be lower, also the cost of electricity, natural gas, plastics and transportation all go down,” he said.
Worry about the supply and price of oil is one reason the United States dispatched more than half a million troops to fight in the first Gulf War in 1990 when Iraq seized Kuwait right next to Saudi Arabia.
Analyst Simon Henderson of the Washington Institute for Near East Policy says fewer concerns about oil will make it harder for U.S. officials to persuade voters to pay the high costs of military actions to help Saudi Arabia in the future.
“We have to pay attention to the Middle East because of its impact on the world oil market and on energy here in the United States becomes a weaker argument," he said. "And people out in Minnesota, or wherever, are going to say ‘why are we bothered?’ about Saudi Arabia. “
Henderson says Saudis are already complaining that Washington is ‘tone deaf” to Saudi concerns about rival Iran’s growing strength and unwilling to take strong action to end the civil war in Syria.
In the past, the Saudis helped Washington when they restrained rising oil prices by increasing their oil production. Henderson says fraying relations with Washington could make them less willing to continue such actions.
But an analyst at the Institute for the Analysis of Global Security, Anne Korin, says oil prices have gone up several fold in recent years, in spite of Saudi actions.
“The common interest that U.S. policy makers have perceived to have had with Saudi Arabia is of course, keeping the price of oil at bay (from soaring)," he said. "I think that has been a completely hallucinatory [untrue] perception.”
She says Saudi leaders are likely to keep oil prices high in the future because they need more revenue. Korin says Saudi leaders were shaken by Arab spring revolts in other nations and greatly increased social spending in the hope of defusing discontent that might threaten their grip on power.
But growing U.S. oil production is likely to reduce Saudi influence on how much Americans pay to fill up their gas tanks.