The United States' domestic oil production has excelled to a record high while becoming one of the biggest gas exporters. Yahoo Finance Senior Columnist Rick Newman details the state of US energy under the Biden administration while global energy markets contend with disruptions tied to Red Sea conflicts and OPEC+ production cuts.
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Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
- American energy, domestic oil production at a record high, and the US is now the world's largest natural gas exporter for the first time ever. Who surfaced those fun facts for us? Yahoo Finance's Rick Newman is here with a look at this. And you have been watching the sort of interplay of the US energy industry with the administration but also the energy industry on its own--
RICK NEWMAN: Right.
- --which has been growing.
RICK NEWMAN: I mean, let's just look at the basics here. So Joe Biden is the most vocal green energy president we've ever had. He made a campaign promise to end fossil fuel. So who would have thought that three years into Biden's presidency, we would be at record production of crude oil, record exports of crude oil, and the same for natural gas-- record production and record exports?
I don't think anybody. And that is not Biden's doing. That is the market doing what it does. You know, we know fracking in the United States has unleashed all these extra reserves that were unreachable before. Energy drillers got completely burned in 2020. Some of them went out of business. A lot of them lost a ton of money because oil prices basically went down to zero.
And so they pulled in. They said, we're not just going to flood the market with supply anymore. They were pretty disciplined for a while. But we've had prices between 70 and 100 for two years. And before that, they were over 100.
So that has slowly just coaxed more energy onto the market here in the United States. And honestly, thank goodness, because look what's going on around the world. Vladimir Putin in Russia clearly has tried to weaponize energy and hold the West hostage to Russia's oil and gas supplies, right?
You've got OPEC plus cartel is cutting supplies. They want to keep the price up. And here comes all this American energy that-- I mean, it's a miracle in a way that energy prices that we've got oil around 72 given what's happening with Russia, given that we have a war in the Middle East. We've got attacks on ships in the Red Sea. And yet, oil is around 72. It's a normal price. And gas prices are around $3, $3.10 a gallon. That's-- a lot of that has to do with all this US energy that's coming onto the market.
- Are you surprised at all, Rick, that the oil market hasn't reacted more dramatically to that conflict in the Middle East? Because the fear was Iran Hamas would spread, but it has spread. It's in Lebanon. It's in the Red Sea. You have Iran-backed militia groups. They're attacking US Navy assets. They're attacking commercial--
RICK NEWMAN: Yup.
- --shippers. Are you surprised there's not more of a response?
RICK NEWMAN: I'm not surprised because anybody who follows the oil markets is intimately familiar with turmoil in the Middle East. You can't get away from it. It's been worse in the past, I mean, when we were more dependent on Middle East oil from Saudi Arabia and Iran and Iraq and Kuwait and so on. I mean, Gulf War 1990, you know?
So I think people who follow the oil market know that it's in everybody-- every oil producer in the Middle East, it is in their interest for the most part to keep the market stable. Now, yes, some of them would benefit if prices went through the roof.
But some of them would also get hurt because it would be their supplies that are not getting onto the market. Would that be Iran because it does something provocative that brings attacks on Iranian oil infrastructure? Would it be other Gulf states that can't get their oil out through the Strait of Hormuz?
Nobody's willing to take the step over there. I mean, yes, we have seen escalation, but we have not seen that kind of escalation. And there's probably some, you know, deliberate self-interest at work there.
So look, this could light off in an instant. You know, if we had one bomb in the wrong place, if something happens that looks like it's going to presage a US-Iranian shooting war, all bets are off. I mean, we could have oil at 150 tomorrow easily. But nobody really wants that to happen.
- Right.
RICK NEWMAN: So so far, it hasn't happened.
- And just quickly, if we did not see a crimping of the US energy industry over the past few years and under Biden, does that mean that's it? It's, you know-- in other words, are we to continue to see the kind of growth that we have been seeing?
RICK NEWMAN: I don't think so. And the other part of the story is that even though we are having record fossil fuel production here in the United States, we are also emitting less carbon. I mean, this trend of reduced carbon emissions in the United States is still on track. We are replacing coal fired plants with natural gas plants and in some cases with wind and solar plants. That's good.
So we are moving down the path toward decarbonization. We're getting more electric vehicle adoption. And we're only seeing the beginning of all those green energy incentives that were in the 2022 Inflation Reduction Act. Those are only just starting to come in. And that's going to incentivize tons of new green energy investments.
So right now, it's kind of a Goldilocks market in the United States in the energy market. It could change. But something's going right.
- All right, enjoy it.
- Not bad.
RICK NEWMAN: Yeah, enjoy it.
- Rick, thank you. Always great to have you on set.
