Saudi Arabia’s oil troubles don’t rattle U.S.

During past disruptions of Middle Eastern oil exports, the United States felt considerable pain as gasoline and other fuel prices soared.

Costs could still climb in the coming weeks if Saudi Arabia doesn’t quickly restore its oil output after a drone attack that is stoking new tension in the region. But these days, the United States isn’t quite as vulnerable to oil price shocks.

A decade-long boom in domestic extraction has turned the United States into the world’s largest oil producer, a position that will cushion the economy in new ways, economists and energy experts say.

Even as prices rise at the pump, more expensive oil will reward Texas, North Dakota and other parts of the country that produce petroleum, boosting investment in rigs and pipelines and potentially creating new jobs that put more money in consumers’ pockets. More valuable U.S. oil exports will also help defend the country’s trade balance.

And this time around, the United States is in a better position to increase its oil exports to help keep global prices down.

“The U.S. produces so much oil now, it just has a bigger offsetting impact,” said Kenneth Medlock, senior director of the Center for Energy Studies at Rice University’s Baker Institute for Public Policy. “Today, we just live in a different world.”

The higher fuel efficiency of today’s U.S. cars will also help soften the blow of price spikes, energy experts say.

Many Americans worry that rising U.S. oil production will sap the nation’s motivation to lower its fossil fuel use and embrace cleaner sources of energy. Climate scientists say higher exports that help lower global prices could also motivate other countries to keep guzzling oil, increasing emissions of carbon dioxide, which are a key driver of climate change.

Economists say failure to reduce atmospheric warming trends will create huge economic costs, through flooding, rising seas, damage to agriculture and other problems.

The Obama administration estimated that every ton of carbon dioxide released into the atmosphere will produce roughly $45 in costs by 2020, a measure known as the social cost of carbon. Global carbon emissions were projected to reach a record high of 37 billion tons last year, a rise of 2.7%. Global energy consumption grew at a similar rate.

U.S. crude oil production has more than doubled since the mid-2000s, to an all-time high of 12 million barrels per day. The boom began after companies started using hydraulic fracturing, or fracking, and horizontal drilling to reach oil previously trapped in shale rock.

That surge caused U.S. exports of crude and refined oil to rise, and imports to fall. The United States has gone from importing 60% of the oil it consumed in the mid-2000s to about 6% today, on a net basis, according to the federal Energy Information Administration.

Crude oil imports from Saudi Arabia have fallen to about 600,000 barrels per day this year, from about 1.5 million per day in 2008.

The production boom has been a major factor driving U.S. economic growth. In the first two years of the Trump administration, the energy sector contributed more than half the U.S. rise in industrial output, according to the Federal Reserve.

When oil prices rise, businesses invest more in infrastructure to boost production, said Jason Brown, a research and policy officer at the Federal Reserve Bank of Kansas City.

Hiring also tends to rise when prices do, though U.S. energy job growth in the most recent price upturn wasn’t as pronounced as in years past because companies are working more efficiently and require fewer workers, Brown said in an interview.