On July 3, 2008, oil closed at $145.29 a barrel. Demand was strong. Inventories were low. And production was inelastic.
A few weeks ago, headlines screamed that U.S. and Gulf State aircraft had target Syrian oil installations under ISIS' control in an attempt to degrade its ability to fund its operations.
Did oil find a new high in the face of yet another round of Middle East jitters?
It did not.
In fact, oil closed yesterday at $87.75 per barrel and that was in increase of 44 cents from the day before.
What has changed? How have we gone from wildly swinging oil prices in the face of even a hint of a wind storm in Eastern Saudi Arabia to ho-hum over potentially major supply interruptions?
We're producing more oil right here in the good ole U.S. of A. That's how.
Remember, I do some writing for T. Boone Pickens and the Pickens Plan.
New York Times reporter Clifford Krauss wrote in Tuesday's editions about a tanker that "set sail with little fanfare from the port of Galveston, Tex., on July 30, loaded with crude oil destined for South Korea."
Krauss reported, that represented the first represented the first "unrestricted export of American oil to a country outside of North America in nearly 40 years. That would take us back to 1974.
Jimmy Carter. The Arab Oil Embargo. Gas lines.
According to the Energy Information Agency oil production in the U.S. hit its peak in 1970 at 9.6 million barrels per day.
By 2008 that number was about five million barrels a day.
We were using about the same amount (until the recession hit full blast) but out production had fallen by nearly half.
We were importing about 10 million barrels a day from OPEC and were paying a terrible price in U.S. treasure and blood to protect those supplies.
Domestic oil production is back up to 8.7 million barrels a day according to Krauss and "with domestic oil production growing month after month, many oil experts predict that the country's output will rise to as much as 12 million barrels a day over the next decade."
Since this renaissance of oil and gas production has hit the market, we have reduced our OPEC imports by about half.
The same thing has happened to oil production in the U.S. as happened to natural gas: New technologies were developed and improved to get oil and gas out of shale deposits in quantities and at costs that were previously unattainable.
"Fracking," it's called, even though that has become as pejorative a word on the Left as "compromise" is on the Right, hydraulic fracturing and horizontal drilling have changed the nature of oil production, distribution, and utilization throughout the world.
The Enviro-Liberals hate fracking because it has done exactly the opposite of what they have been lobbying for: It has made oil (and gasoline) cheaper so we use more of it. Or, at least, we aren't flying into a blind rage every time we go to a gasoline pump.
Liberals want to Europeanize gasoline prices so we will drive smaller, more fuel-efficient cars until we can switch all 250 million cars and light trucks in the U.S. to battery power.
As of September 29, here was a representative sample of gasoline prices per gallon (in U.S. dollars):
US - 3.71
Belgium - 7.38
France - 7.15
Germany - 7.52
Italy - 8.28
Netherlands - 8.25
UK - 7.89
All is not rosy with even a small resumption of oil exports. There is an argument to be made that we should look for ways to utilize domestic oil right here at home. If we have the cheapest energy in the world, we should look for ways to bring manufacturing back on shore and utilize it.
For natural gas, as you've read for years, Boone Pickens wants to use it to fuel heavy trucks (that batteries can't move) instead of imported diesel to further reduce our need for OPEC oil.
For an industry that has been vilified, taxed, regulated, and reviled; oil and gas producers are exerting a powerful positive force on the U.S. economy.
They should stand up and take a bow.
On the Secret Decoder Ring page today: Links to the NY Times article and a pretty good chart showing oil production from 1860 onward. Also, the most frightening Mullfoto in Mullings history.