How shale boom insures US against possible military strike on Syria
The possibility of a military strike on Syria has investors worried an attack could spread trouble across the Middle East and cut off oil supplies. But, for the first time in 50 years, the US is not as worried about disruptions to the oil markets, resulting from a possible military strike on Syria, as domestic production is at a 20-year high.
A crew works on a gas drilling rig at a well site for shale based natural gas in Zelienople, Pa. Record levels of domestic oil production helps buffer the US against the effects of a possible military strike on Syria.
Keith Srakocic/AP/File
As always, the markets are roiling in anticipation of a US-led attack on Syria, and the ensuing trouble that such an attack could cause in the Middle East, and its impact on global oil production and supplies.
On the New York Mercantile Exchange, West Texas Intermediate crude oil jumped聽l聽on Tuesday聽to begin trading聽on Wednesday聽at $110.45. Gasoline prices in the US have risen the most in six weeks despite most analysts having predicted a fall in price in line with the traditional seasonal decline in demand.
The problem is that any conflict in the Middle East runs the risk of spilling over into the other countries, potentially impacting on crude oil production and supplies to the rest of the world via the Straits of Hormuz. (Related article:聽)
This time, however, for the聽, the US is not as worried about disruptions to the oil markets and potential short term spikes in price, resulting from conflict in the Middle East, as domestic production, driven by the shale boom, is at a 20 year high.聽
Massive success in fracking means that the US relies far less on foreign imports, and the WSJ points out that the US now has enough crude oil to supply itself聽, without imports; up from 150 days just five years ago. That figure jumps to over a year once Canadian crude supplies, the US鈥檚 largest source of oil imports, is taken into consideration; and crude will continue to flow from Canada regardless of any conflict in the Middle East.
Fracking will never make a country completely immune to global price volatility, but it can provide protection against short term swings created by international supply disruptions. Maybe this relative freedom from spikes in oil prices has released the US to move into action in the Middle East sooner than it previously would have.
Original article:聽