Commentary:
The Yom Kippur War was a war waged against Israel when a coalition of Arab states, led by Syria and Egypt, attacked it on October 6, 1973. The war lasted 20 days, with Israel prevailing over the Arab coalition. During the war, the world was fearful of a larger nuclear war, as the U.S. provided aid to Israel, and the Soviet Union to the Arabs. During the war, Arab members of OPEC announced that they were going to reduce their oil production by 5 percent per month. When President Richard Nixon sent a major arms package to Israel towards the end of the conflict, Saudi Arabia imposed an oil embargo on the U.S., which was eventually joined by other members of OPEC. This lasted until March 1974, and became known as the Arab Oil Embargo, which caused a major energy crisis in the U.S. and throughout the world.
As a little boy, I watched the results of the Arab Oil Embargo on TV. I remember seeing pictures of lines of cars stretched out as far as the eye could see, their drivers desperately trying to fill up with gasoline. Everybody was desperate to get gas, and prices were skyrocketing. Fights broke out as customers jockeyed to move forward in the lines, and gas station owners were under tremendous stress as they were swarmed upon by angry people caught in an unforeseen situation. I remember thinking that when I grew up, there would not be enough gas in the world for me to own a car.
Flash forward 50 years and here we are again. Israel is now in another war with an Arab group, Hamas, and the U.S. is again strongly supporting Israel with moral support and arms. People are again worried about the escalation of this conflict into a U.S.-Russia nuclear war. They are also worried about the effect that this latest war will have on the disruption of petroleum production, and the use of petroleum as a weapon by countries such as Saudi Arabia to get the U.S. to back off its support of Israel.
Given Russia’s continuing war with Ukraine, and Vladimir Putin’s ever-increasing desperation to achieve his aggressive objectives, nuclear war is again a major concern. There is also the reality that this war has disrupted Russian energy supply sales to central and western Europe. However, the possibility of having a second Arab oil embargo that paralyzes the U.S. economy seems less likely today. As was the case 50 years ago, the Middle East remains a major world producer of petroleum. However, what is different now is the U.S.’s position in the production of petroleum.
During the past 50 years, the U.S. has focused on introducing new technology in its petroleum production. Techniques such as fracking and pad drilling have catapulted the U.S. into the number one slot of petroleum producing countries. According to the U.S. Energy Information Association, the U.S. produces an average of 20.30 million barrels of oil per day, which equates to 21 percent of the world’s total share. The U.S. is followed by Saudi Arabia (12.44 million barrels per day and 13 percent of the world’s share), Russia (10.13 million barrels per day and 10 percent of the world’s share), and U.S. ally Canada (5.83 million barrels per day and 6 percent of the world’s share). The other Middle Eastern producers in the top ten account for much less as a percent of the total world petroleum market: Iraq (5 percent), Iran (4 percent), and Kuwait (3 percent).
The Permian Basin, which lies between southeastern New Mexico and western Texas, is the largest oil producing region in the U.S. In 2022, it accounted for approximately 43.6 percent of all oil production in the U.S. According to the Dallas Federal Reserve Bank, “If it were a country, the Permian Basin would be one of the largest producers of oil in the world. And while the area receives much attention for its oil production, it has also become a major producer of natural gas and of natural gas liquids.” In my home state of New Mexico, the petroleum industry has been contributing more than $4 billion in revenue to the state from severance/property taxes and royalty income. New Mexico is now second only to Texas in oil production. The news about petroleum production gets even better, as the rise in petroleum production is on track to break a record this year and is predicted to be even higher in 2024.
All of these statistics are not a guarantee that the U.S. oil industry won’t fluctuate. As we have seen during the last few years, gas prices go up and come down frequently. This is simply the nature of the industry. We do see lines at gas stations that offer the cheapest gas in town. However, these lines are not being caused by wars in the Middle East or Eastern Europe. It is clear that the U.S. is in a much better position to protect itself from a petroleum standpoint than it was 50 years ago.
This petroleum stability does not mean that we can take our focus away from developing renewable energy sources such as wind and solar. Petroleum extraction is a zero-sum game, in the sense that once you pump it and put it to use, it is gone. Unlike fossil fuels, the sun and wind are not deplenished sources of energy. No country or geopolitical situation can take these sources of renewable energy away from us.
Jerry Pacheco's opinions are his own and do not necessarily reflect the views of KRWG Public Media or NMSU.