However, what’s more important than the size of these newly available resources is the stability of the governments overlaying them. Adding a resource base that exceeds two of the top five OPEC nations not only increases the global supply of oil, it makes that supply more politically stable. It does so by reducing the leverage, and influence, of producing nations prone to political instability- a key determinant in global price stability.
The report’s errors don’t end in failing to recognize our enormous resource potential. Even if one accepts the premise that increased U.S. production will automatically be offset by decreased production elsewhere the report still misses the mark on its U.S. energy security predictions. The reason for this is simple. This view completely ignores the additional capacities that will rise as new resources are discovered or as production from older resources is curtailed. The mere presence of these additional resources, and the ability to produce them, serves as a downward force on global oil prices. After all, when additional capacities increase there is reduced risk that an unexpected disruption will cause serious shortages given the increased diversity of supply. Further, there is a tremendous price spread between North American crude oil supplies and the supplies that we are buying from overseas markets – as much as $30 per barrel according to one recent report.
Simply put, increasing our reliance on friendly nations and our own supplies serves our best interest by increasing the reliability of those supplies, reducing demand from unstable sources, and reducing the importance of any one nation in the global energy picture by expanding the overall resource pie.
Unfortunately, CBO has either missed these fundamental points and has provided Congress with a faulty analysis.
Now, more than at any point in our history, our nation requires, and is equally able to achieve, a bold “all of the above” energy policy focused on strengthening our national self-sufficiency. This can only be accomplished through the application of market based principles and the diversification of our conventional and renewable domestic energy resources. Failing to recognize these key facts serves no one and only detracts from developing a responsible national energy policy that will benefit the American economy and consumer.