Remember when Boone Pickens launched the Pickens Plan in 2008?
The legendary energy entrepreneur predicted that breakthroughs in technology would make it possible for the U.S. to develop greater energy security by relying on American energy. Did he call that right.
Since 2008, domestic oil and gas production has more than just increased. It has surged. Not only has the U.S. become more self-sufficient, but, according to Joe Nocera at the New York Times, this jump in production has diminished the importance of OPEC to a level that is almost unimaginable.
According to Nocera, “if America plays its cards right, OPEC’s dominance over the oil market could be over. I think that day may have already arrived.” Nocera credits two forces for this dramatic change: decreased global demand and increased oil and gas production in the U.S.
Since 2008, says Bernard Weinstein, an energy expert at Southern Methodist University, oil production in the United States is up 60 percent. That’s an additional three million barrels a day. Within a few years, predicts Morse, America will overtake Russia and Saudi Arabia and become the world’s largest oil producer.
One of the byproducts of these two developments is a brawl among OPEC members as they try to pay their bills.
Venezuela’s budgetary needs requires that it sell its oil at well above $100 a barrel. The Arab Spring prompted a number of important OPEC members — including Saudi Arabia and the United Arab Emirates — to increase budgetary spending to keep their own populations quiescent. According to the International Monetary Fund, the United Arab Emirates needs a price of more than $80 to meet its budgetary obligations. That’s up from less than $25 a barrel in 2008.
Read more about OPEC’s current state of affairs in Nocera’s informative column HERE.