Strong Economics Drives Smart Statecraft

American statecraft gets a boost from American industry

This year, the United States is expected to surpass Saudi Arabia and to rival Russia as the world’s leader, with record output of over 10 million barrels a day, according to the International Energy Agency.

During the week of September 30th, 2005, American industry produced **3,800,000 **barrels of crude oil per day. For the week of January 19th, 2018, American industry produced nearly 9,900,000 barrels of crude oil per day. EIA has more data here.

In less than thirteen years, American crude production increased by 2.5x.

For the first time in modern history, increased energy capacity will have significant downstream consequences for American statecraft.

Historically, the market for usable energy — in the form of crude oil — is controlled largely by an organization of fourteen Middle Eastern, African, and South American countries. This organization, called OPEC, is often referred to as a cartel because its government members, not the free market, set the price of crude oil.

But it looks like OPEC’s cartel monopoly is over. From late 2016 to late 2017, OPEC imports decreased by 20%. American natural gas production doubled in the past decade — the so-called “Shale Revolution” — and is challenging Russian domination.

Without an abundant need to tap OPEC oil, how will America’s diplomatic, military, and financial commitments change?

If America becomes a significant energy exporter, will it reduce or increase its international obligations?

Will regulation strike an appropriate balance between environmental and energy concerns?

It’s hard to know, but this is why market forces, when they work, are powerful and far-reaching. Driven by technology and private capital, an energy-independent America will have more flexibility to conduct strategic statecraft. The implications will be significant for every person, everywhere.