Oil PricesOctober 28, 2014
Lower oil prices are definitely helping American consumers, adding tens of billions of dollars to their disposable income by reducing the price they pay for gasoline and oil products and lowering the costs of producers of the goods and services they buy. The American energy boom is also helping President Obama’s foreign policy. Oil and gas revenues make up about 70 percent of Russia’s government income. Russia is the second largest exporter of oil in the world and is seventh in terms of oil reserves. The rapid decline in oil prices has produced a dramatic decline in Russian revenues which finance their oversized military budget. It also hurts the Russian oligarchs who are friends of Putin and depend on oil revenues.
So, markets are putting a real crimp in Putin’s activities, perhaps much more severe than President Obama’s sanctions. Obama should thank free markets for the assist. Even better, the President might support the extension of the energy boom to federally controlled lands and offshore sites. Further developing our oil supplies will keep a downward pressure on oil prices, benefiting consumers worldwide while creating thousands of new jobs in the U.S.
Finally, the President might want to accelerate the licensing and development of natural gas exporting facilities, further weakening Putin’s grip on Europe’s energy supplies and developing our domestic natural gas industry. It’s a “win-win,” unless you believe that wind and solar are the only acceptable sources of energy as some of our politicians do.