The malady afflicting the country was unmistakable, according to George W. Bush. “America is addicted to oil,” the president observed in his 2006 State of the Union address. This wasn’t just an observation. It was a call to arms. If the U.S. failed to wean itself off foreign oil, the consequences for the domestic economy and U.S. foreign policy would be grave. Doing so would require substantial investments in America’s ethanol industry as well as the development of oil deposits in pristine natural parks and off the nation’s shores.
In 2008, the U.S. produced an average of just 5 million barrels of oil per day—the nadir of domestic energy production since the exploitation of fossil fuels began in the late 19th century. By 2009, the price of West Texas Intermediate crude was approaching $150 per barrel. The U.S., therefore, was obliged to spend over $1 billion per day on oil imports from foreign countries, few of which could be considered models of good governance. America’s thirst for oil propped up abusive governments in places such as the Democratic Republic of Congo, Venezuela, Pakistan, Saudi Arabia, Algeria, Mauritania, and Syria.
But even as Bush addressed the nation in 2006, a remarkable new technology was quietly coming of age. It would have a profound impact on the American economy and geopolitics in the decade that followed. That technology—hydraulic fracturing, or “fracking”—yielded an energy boom and scrambled assumptions about how the world would organize itself in the 2010s and beyond.
In 1998, a petroleum engineer named Nick Steinsberger pumped a slurry of sand, water, and chemicals under high pressure into a shale formation beneath a rural town just north of Fort Worth, Texas. It shattered the rock and released the natural gas trapped inside. A decade later, the petroleum industry discovered how to apply Steinsberger’s approach with directional drilling to free not just natural gas but the hydrocarbons that make up crude oil from subterranean rock formations.
At the beginning of the 2010s, the soaring price of oil and the low interest rates that followed the collapse of the mortgage market made the enormous costs associated with the development of techniques like fracking seem reasonable. Investment dollars poured into the firms that were pioneering unconventional drilling methods, and those firms began to apply those techniques to previously unexplored shale formations across the country.
By 2012, the U.S. was producing more domestic energy than it had since 1998, when Steinsberger fracked his first well. The following year, domestic American oil production exceeded imports for the first time since 1991. In June 2014, the price of crude oil peaked at $108 per barrel. On December 18, 2015, President Barack Obama signed a law repealing the 1975 ban on the export of domestically produced petroleum products. In January 2016, the global price of crude oil plunged to just under $30 per barrel.
In November 2014, the Saudis rejected calls from poorer OPEC member states to cut production rates in the effort to prop up sliding crude prices. That slide became a collapse, sending benchmark Brent Crude prices below $72 per barrel. Indeed, led by Saudi Arabia and Iraq, OPEC’s response to the challenge posed by American wells wasn’t to cut production but increase it. “It should be in the interest of OPEC to live with lower prices for a little while in order to slow down development projects in the United States,” one petrochemical consultant told Reuters.
The U.S. did not slow down.
At the end of 2018, the U.S. produced nearly 18 million barrels of petroleum products (crude oil, natural gas, and refinery products) per day. For the first time in 40 years, the U.S. had outpaced Saudi Arabia’s output, and estimates showed that it also surpassed Russian oil production. By 2022, the United States is forecast to become a net energy exporter for the first time in nearly 70 years.
The commercial effects of reduced energy prices were unmistakable, but the impact of the fracking revolution on geopolitics was less immediately apparent. It would not be long, though, before that would become clear, too. According to the recent congressional testimony of former National Security Council official Fiona Hill, Russian President Vladimir Putin recognized the threat to his country’s position posed by American fracking technology as early as 2011. He was soon feeling the pain. In November 2013, the U.S.-based multinational Chevron signed a deal with Ukraine and its Russia-friendly president to develop the country’s domestic shale-gas deposits—wresting control of the country’s energy sector from Moscow, which wields its oil and gas exports like a weapon. By late 2014, Russia was forced to contemplate a net 10 percent reduction in domestic spending to compensate for the revenue lost amid falling oil prices.
Venezuela sits atop the world’s largest crude-oil deposit, but its corrupt and socialist government needed oil to trade at around $100 per barrel to cover its own costs. By the time Obama halted Venezuelan oil imports in 2015—itself an action facilitated by America’s renewed production capacity—crude was trading at around $50 per barrel. Obama only reluctantly set sanctions against the Venezuelan regime in response to its violent repression of popular anti-government protests, and those sanctions were tailored to avoid targeting the already struggling Venezuelan oil sector. Those limited sanctions had little effect on the regime’s behavior. The Trump administration has since blacklisted the Venezuelan oil tankers trading with Communist Cuba, prohibited American businesses from engaging in transactions with the Venezuelan national oil industry, and halted U.S. exports of light crude to Venezuela, where it was blended, refined, and exported.
The most disorienting seismic shifts attributable to the fracking revolution have been felt in the Middle East, where oil served as the lifeblood of rogue regimes for almost a century.
The Bush administration found itself at a disadvantage in its effort to combat an insurgency in Iraq that was fueled in large measure by Iran. “A big part of the reason why they didn’t ultimately impose really harsh sanctions on the oil industry is because they were concerned about what that would do to the oil market, the oil price, and the global economy,” said Sam Ori of the University of Chicago’s Energy Policy Institute. But by December 2011, when the Obama administration placed sanctions against the Iranian oil sector, the global oil supply had increased to the point that few feared negative economic ramifications from reduced Iranian output or that Tehran would benefit from increased global oil prices amid a supply crunch.
The Obama administration lifted those short-lived sanctions as part of its effort to reach an accommodation with Tehran over its nuclear program. When the Trump administration reimposed them, the effect was immediate. Iranian crude exports plummeted. International oil companies abandoned plans to develop Iranian energy deposits. The Iranian public revolted against their new normal and, by late 2019, posed an existential threat to the regime when Tehran was forced to pare back state-provided gasoline subsidies. All the while, the price of petroleum products in the U.S. remained stable.
If the shale boom allowed America to pursue a harder line against Iran, it also freed policymakers in Washington to move closer to its natural ally in the region: Israel. A reduced dependence on foreign oil producers “allowed the president to make foreign-policy decisions that simply were not available to previous presidents, at least not in my lifetime,” Deputy Energy Secretary Dan Brouillette told the Financial Times in March. The Trump administration has tested that proposition, moving the U.S. Embassy to Jerusalem and recognizing Israel’s sovereignty over the Golan Heights—maneuvers that foreign-policy observers were once certain would prompt a revolt across the Muslim world. The “Arab Street” suddenly had more pressing concerns closer to home to worry about.
A region-wide Sunni–Shia conflict had been brewing for some time, pitting states such as Egypt, the United Arab Emirates, and Saudi Arabia against Iran and its proxies. This covert conflict has recently taken on a more conventional flavor, culminating in September 2019 in a sophisticated Iran-linked attack on a Saudi oil-processing plant. That was the climax of a series of Iran-backed attacks on the global energy-supply chain, which included multiple strikes on foreign-flagged oil tankers in the critical Strait of Hormuz. In a time before fracking, such brazen assaults on the global economic order would have been nothing less than casus belli demanding an international military response. Instead, the strike that crippled the world’s largest petroleum-processing facility drove global energy prices up to a meager four-month high. Within days, Riyadh had restored 50 percent of the lost production capacity, and it had returned to full pre-attack levels of oil output by the end of the month.
Why did this destabilizing assault on Saudi sovereignty and the global oil market fizzle? The answer: the United States, which now possesses the capacity to calm roiling panics in the event of an oil shock. When Iran struck, the Trump administration immediately announced it would release an unspecified amount of strategic reserves. That, combined with a Saudi pledge to bring additional offshore capacity online, stabilized the market and prevented Iran from starting what might have been a major war.
Revolutionary technological advances are often accompanied by a popular backlash, and fracking is no exception. Germany, France, Holland, the UK, and Bulgaria have effectively banned it—increasing their dependence on outputs from outlaw regimes such as Vladimir Putin’s. In March 2019, Israel’s environmental ministry placed a hold on all domestic fracking projects. In the United States, environmental activists have convinced Democratic lawmakers to impose severe restrictions on the practice, citing unproven claims that the chemical additives used in fracking—most of which are lubricants to facilitate the dispersal of sand and other material from the black stuff—contaminate underground sources of drinking water. Some activists even claim that fracking is a major cause of unnatural earthquakes (a myth that persists despite the U.S. Geological Survey’s comprehensive efforts to debunk it).
These efforts have had some success. Colorado—an early supporter and beneficiary of fracking technology—has since passed laws that are intended to make the practice financially unattractive. The state of New York prohibits fracking altogether, which has allowed fracking-rich Pennsylvania alone to exploit the natural gas locked inside the Marcellus Shale Formation above which New York is providentially situated. No fewer than six of the top-tier 2020 Democratic presidential candidates have pledged to ban fracking outright.
Environmentalists concerned about the deleterious effects of increased fossil-fuel production should be elated by the fact that their fears have not been borne out. Despite the radical increase in domestic energy production, the United States produces less carbon dioxide from power generation than it did in 1985. Even as the population expands and the country’s gross national product grows, America’s new reliance on abundant, cleaner-burning natural gas has helped reduce the pollution that would have once been the by-product of satisfying America’s energy needs.
In 2009, as world leaders prepared to descend on Copenhagen for a global climate summit, an anonymous whistleblower from within the International Energy Agency sent shockwaves through the international energy community with the revelation that global oil production would soon enter terminal decline. The world, he reported, had already reached “peak oil.” This was not so much false as it was a demonstration of why straight-line projections are almost always fallacious. The period of geopolitical flux that fracking has unleashed will present its own set of challenges in the next decade, but America will meet them from a renewed position of strength and independence. If the energy revolution of the 2010s has made anything clear, it is that it’s never wise to underestimate Americans’ ability to engineer a better future for themselves.