Export, baby, export

Frackers are disrupting energy markets as history is made at the Panama Canal.

“Drill, baby, drill,” has been the unofficial motto of the American oil and gas industry. As OPEC suddenly announces a previously unscheduled meeting for late next month, we imagine they’re saying something along the lines of: “Stop, baby, stop.”

OPEC nations have flooded global markets with crude over the past two years in an attempt to drive U.S. frackers out of business and maintain the oil cartel’s dominant market share. But hopes that the self-induced oil bust had finally stabilized at a sustainable level have been dashed. After hitting $50 a barrel just two months ago, oil prices have collapsed back toward $40. The consequences of cheap oil continue to plague major producers who thought the worst was behind them.

Saudi Arabia, the powerful OPEC leader, has been grappling with budget cuts, and unemployed workers face starvation in migrant camps, CNN reported this week.

Without oil revenue to support its socialist state, Venezuela has started to rely on involuntary labor to work the agricultural industry while grocery store shelves lay bare.

Here in the United States, private producers have seen their earnings plummet while layoffs continue to hit and hurt our state. Texas drillers have laid off about 20 percent of their employees since last June. Three major oil field service companies — Schlumberger, Halliburton and FMC Technologies — cut a combined 14,000 jobs from April through June.

National job statistics are practically flip-flopped: Houston is flat even though the rest of the nation is growing. The Federal Reserve Bank of Dallas has predicted that the ripple effects of a weak oil and gas market will hit construction and other local industries in Houston for months to come.

Things certainly don’t look good for the energy capital of the world. But if you peek beyond the immediate statistics, there’s reason to think that we’re on the right path.

The United States is still producing oil at a rate unmatched in 40 years, and we’re selling that product on a global scale after Congress removed the export ban last year.

The construction of liquefied natural gas export terminals is also starting to bear fruit. The firstever LNG tanker sailed through the expanded Panama Canal last month, sending fuel from Sabine Pass in Louisiana to Asia. Before that expansion, only 6 percent of the world’s LNG tankers could sail through the Panama Canal. Now that number is at 90 percent, essentially revolutionizing energy markets by connecting Pacific consumers with Gulf Coast producers.

On the other side of the world, the promise of cheap U.S. natural gas exports has started to threaten Europe’s reliance on coal as a baseline energy source, according to the International Energy Agency and Goldman Sachs Group Inc. That should come as good news for both frackers trying to make money and environmentalists concerned about global warming.

Overall, our nation is on the verge of jumping from a non-entity in global gas exports to the third largest player. The supply we’re starting to provide, in addition to Australian exports, has added a newfound flexibility to gas markets that undermines the sort of longterm contracts that Middle East petro-despots and Vladimir Putin have used as political tools.

Two years ago, OPEC decided that it wanted to play a game of chicken with frackers. There’s been hurt on both sides, but any way you measure it, U.S. layoffs have been far less painful than the massive economic consequences suffered by OPEC nations. In other words, we’re winning that game of chicken.

Drill, baby, drill did its job. Now it is time to update the motto: Export, baby, export.