In so many ways, Donald Trump was born too late — too late for his Hugh-Hefner-wannabe conception of masculinity, too late to have a press corps lacking the skills to undress his pretensions to self-made wealth, too late for his casual racism and constant lying to impress more than 40% of the electorate.
But there’s one thing Trump is too early for: He’s a year or two too early to exercise the strategic fruits of America’s looming energy independence.
With the leverage that near-energy independence brings, Trump could tell the desert kingdom of Saudi Arabia to pound sand in the crisis over the apparent homicide of Washington Post columnist Jamal Khashoggi, at a time when signs point to Saudi agents acting at the behest of Crown Prince Mohammed bin Salman, or MBS, committing premeditated murder over the exercise of liberties Americans take for granted. Without that leverage, Trump’s a schmo with his hat in his hand, pretending to believe Saudi fairy tales about “rogue killers.”
Thanks to hydraulic fracking, the U.S. and Canada are indeed on track for something that looks very much like energy independence by 2020 — the same timetable Citigroup analysts first laid out in 2012. Interior Secretary Ryan Zinke laid out new numbers this week: By then America’s daily oil production will be 14 million barrels per day, up from 5 million in 2008 and approaching U.S. consumption of 20 million barrels per day, Zinke said. Add in Canadian production of 4.2 million barrels daily, and North American energy independence is about to be fact.
“We’re the largest energy producer on the planet, rolling through 11.2 million bpd on the way to 14,” Zinke said.
That makes the picture in the Mideast totally different than what it is now: The crown prince gesticulating, figuratively, with a bone saw that he wants to take to U.S. prosperity, much like the one Turkish sources say the Saudis used to cut Khashoggi apart, beginning with his fingers, the better to make the point that typing as if the press were free displeases the gods.
The U.S. imports about 700,000 barrels of Saudi oil daily, and is already under price pressure — Brent crude oil LCOZ8, +0.66% is up about $33 per barrel in the last 15 months — largely because of looming U.S. sanctions against Iran.
Trump needs the Saudis to boost production by 15% to make up for the 1.5 million barrels or so that Iran sanctions are expected to take off the world market. It won’t do to convince Saudis to take more oil off the market by embarrassing, or even sanctioning, the prince recently known as MBS.
“I don’t expect any implications for Saudi oil production from this diplomatic row,” said Moody’s Analytics energy economist Chris Lafakis. With “the U.S. exerting tremendous pressure on other countries to excise Iranian oil imports, the administration needs Saudi oil production to be as high as possible to limit the impact on prices. They cannot afford to sanction Saudi oil production.”
And there you have the real reason there’s no pressure on Saudi Arabia from the administration. It’s not about arms deals, the phoniness of which fact-checkers have already explained. Oil explains why Secretary of State Mike Pompeo claims to have met with senior Saudi officials in Riyadh and not pressed them on whether Khashoggi’s alive or dead.
By the way, Mr. Secretary: Suuuuuurrrre.
Right now, the big logjam in U.S. oil is pipelines, not the ability to pump oil from the ground at a reasonable price. But those pipelines are coming: New connections between the Permian Basin of Texas and refineries along the Gulf of Mexico are expected to go online next fall. And the Keystone XL pipeline is expected to begin construction this fall.
Let’s lay aside one obvious fact: One can’t imagine President John McCain debasing himself as Trump has, pretending to believe Saudis’ shifting stories about Khashoggi. Neither would McCain come with years of financial entanglements with that corrupt regime. Even without oil leverage, Saudis would have leverage on Trump, and the president would still be a fatuous, easily impressed fool. Character will matter still.
But in two years, we’ll have the capacity to produce and move enough oil to make Saudi Arabia basically irrelevant to us, except to the extent a president might worry that MBS will apply his bone saw to the metaphorical neck of trade partners such as India and China.
That doesn’t even account for what happens when electric vehicles become cheaper than gasoline-powered ones — around 2023, according to Bloomberg New Energy Finance. Two thirds of U.S. oil consumption is for personal vehicles: Cut their oil consumption by a third to one-half, as EVs gain market share, and watch Mr. Bone Saw’s leverage shrivel.
So the takeaway, for now, is this: Beginning In two years, Americans will be able to tell people like MBS to hit the road. Funny, that’s also when we’ll have a chance to say the same to Trump, bin Salman’s whipping boy.
