Environmentalists like a good crisis. Spreading fear is a proven fundraising technique—with manmade climate change as the fear du jour. But, back in 2005, the “looming crisis,” according to the Kansas Sierra Club, was the end of cheap oil. The post concludes: “The end of cheap oil, followed by the end of cheap natural gas, threatens to cripple strong economies and devastate weak ones.” The author posits: “The world burns oil faster than new oil is discovered.”
Today, slightly more than 10 years later, thanks to American ingenuity and initiative, the world is awash in oil and natural gas—with America being the world’s number one energy producer. As a result oil and natural gas are cheaper than anyone imagined just a few years ago when the price of gasoline, due to a “red-hot global economy and fears over dwindling supplies,” spiked to $4.11 a gallon in 2008. All time highest average gasoline prices of $3.60 in 2012—during the last presidential election—gave credence to the “end of cheap oil” gloom-and-doom scenario.
The Sierra Club predicted: “We’re running out of oil we can pump from the ground and market for under $60 a barrel. Most people alive today will see the end of cheap oil.”
But that all changed when the techniques of horizontal drilling and hydraulic fracturing were successfully combined—allowing previously unrecoverable oil and natural gas to be extracted—unleashing the new era of American energy abundance.
Today, the price of oil is threatening to drop below $30 a barrel. The average price of a gallon of gasoline in the U.S. is below $2.00—with one station boasting a cash price of $1.29.
The Sierra Club author could not foresee energy history being made in January 2016—when a complete reversal from cries of scarcity is taking place. Within a matter of days from one another American oil and natural gas will enter the global market.
Despite predictions that, given how flooded the global crude markets were, lifting the oil export ban wasn’t likely to translate into any immediate exports, the first shipments of U.S. crude oil in more than 40 years left our shores heading to Europe. On New Year’s Eve, a tanker—the Theo T.—pulled out of Corpus Christi, Texas, with roughly 400,000 barrels of crude supplied by ConocoPhillips from the Eagle Ford Shale. Saturday morning, January 9, the second tanker, the Angelica Schulte, left the Houston ship channel after Enterprise Products Partners loaded it with 600,000 barrels of light crude oil. 
As early as next week, the first ever tanker of liquefied natural gas (LNG) from the lower 48 states could head out filled with U.S. shale gas. (LNG exports have not been restricted by law or regulation. However, a decade ago, it was predicted that the U.S. would be importing 25 percent of our natural gas. LNG import terminals were built. Now, because the U.S. shale boom displaced the need for LNG imports, those terminals are being converted to export LNG that can now flow to our friends in Europe.)
The Energy Atlantic LNG tanker is expected at Cheniere Energy’s Sabine Pass terminal in southwest Louisiana on January 12. The terminal—once called “America’s most unlikely energy project”—is one of “the largest industrial energy facilities under construction in North America.” Costing more than $20 billion over more than a decade, Sabine Pass represents a turnaround for Cheniere Energy. It is the first of its kind to be built in the U.S. in nearly 50 years.
“The Sabine Pass LNG export facility has already created thousands of new energy jobs and provided a major boost to our economy,” Senator David Vitter (R-LA) told me. “It’s so encouraging to see the project coming to fruition. Bringing in and supporting major economic development projects like this is huge for Louisiana, and we need to continue to take advantage of Louisiana’s abundant resources.”
The natural gas is being liquefied—meaning it is super-cooled and compressed to 1/600th of its volume. The super-dense liquid weighs 3.5 pounds a gallon and will be loaded onto tankers and sold to customers worldwide.
Once operational, Bloomberg reports, about 700 million cubic feet of natural gas will begin arriving each day, from all over the country. The Sabine Pass facility is “the end of America’s natural gas pipeline network.”
January’s milestone shipments of both oil and LNG are just the start. Most believe that oil will need to be over $50 a barrel for exporting to make widespread economic sense. The planned January LNG shipment is a test cargo. Commercial operations are expected later this year. Regardless, January 2016 is a tipping point—the month that the U.S. became a global energy super power. Both can be “leveraged diplomatically with friends and foes overseas and used to dramatically improve the country’s chronic balance of payments deficit.”
If there is a major supply disruption such as 2011-2012 when Libya fell off-line—which could happen as a result of the current Saudi Arabia/Iran conflict which has the potential to trap 20 percent of the world’s oil behind the Strait of Hormuz—RealClearEnergy’s Bill Murray predicts: “Demand for U.S. production would be massive.” He says: “the millions of barrels of possible crude coming out of the U.S. will be of great strategic and diplomatic value.” Because of low crude oil prices, many rigs have been pulled from the field; wells have been capped. But we know where that oil is, and, when prices warrant it, we can easily turn the flow back on. Especially for Texas’ Eagle Ford and the Permian Basin located in Texas and New Mexico, the pipelines are already in place and exporting can ramp up quickly.
LNG exports will also have significant geopolitical impacts by providing energy security for our allies. In the Wall Street Journal, Jason Bordoff, a professor of professional practice in international and public affairs, states: “In Europe, where gas import dependence is rising, the Energy Union package aims to reduce vulnerability to Russian gas dependence through market integration and increased pipeline interconnectivity and flexibility.” He adds: “providing those countries with alternative options to Russian supply,” reduces Russian leverage. With American supplies in the global market, Russia, Iran and Qatar are no longer the global players they once were and natural gas prices for other countries are coming down. One country hoping to take advantage of this benefit is Croatia, which Reuters reports: “is looking to reduce its reliance on Russian gas imports.” In July, the Croatian government determined importing LNG “to be of strategic interest.” Building an LNG import terminal there is in the bidding stages.
Another place American natural gas, in the form of LNG, can be beneficial is Puerto Rico—the U.S. territory that, unlike the mainland, currently gets most of its electricity from oil. Puerto Rico is in the process of transforming its power generation from primarily oil to natural gas and a new LNG import terminal is expected to be in service by the middle of 2017.
U.S. oil and natural gas entering the global market changes the energy landscape, allowing us to help our allies with reliable supplies, help balance our trade deficit, and will give U.S. companies a wider playing field.
Murray points out: “By acquiescing to the ban’s lifting, congressional Democrats—and President Obama—implicitly admitted that conventional economic views on oil and gas supplies were wrong. Domestic supplies weren’t in inexorable decline.” Instead of running out of oil and natural gas, as predicted by the Sierra Club and many others, we are now an energy superpower showing the world, as Kent Moors said: “what can be accomplished with private property and profit incentive, with a fair amount of entrepreneurial skill for good measure.”
Hmmm, probably American ingenuity and initiative can be applied to some of the other supposed looming crises should they ever materialize.
The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE).
She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column.
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