Americans should welcome global crude-oil prices plunging below $65 a barrel and hope the combination of demand blunted by economic slowdowns in Europe and China and abundant supply driven by soaring U.S. production and OPEC not cutting output will continue.
Pulitzer Prize-winning energy expert Daniel Yergin, vice chairman of global business analytics firm IHS, thinks it will. He notes in The Wall Street Journal that technology enabling extraction of “tight oil” from shale has boosted U.S. production by 80 percent since 2008. That shows then-rampant “peak oil” talk was utter folly — and should squash “peak shale” notions today.
Mr. Yergin says OPEC’s large, well-off Persian Gulf members are maintaining output to avoid losing market share. That hurts less-well-off, anti-American OPEC members Venezuela and Iran, which depend heavily on oil revenues — and drives leading global producer and OPEC nonmember Russia, which derives more than 40 percent of its budget from oil, deeper toward recession.
The current glut will slow investment in new production, but not quickly — and mostly in developing nations. Yergin expects U.S. output to grow next year, with “tight oil” production remaining economical at $50 to $69 a barrel. That’s a bright forecast for America’s consumers, economy and national security — one of less dependence on foreign oil and greater U.S. strength.