NORTH American oil independence is inextricably tied to North American oil independents.
Continental Resources Chairman Harold Hamm made the point in these pages the other day that the oil industry, led by independent firms such as Continental, is bringing this country ever closer to being free of dependence on imported oil.
The goal isn't to be free of oil imports. It's to be free of dependence on those imports. A balance of foreign and domestic supplies is good for national security and good for consumers.
Hamm celebrates the use of horizontal drilling and its effect on supply. It's worth celebrating for a number of reasons, especially in Oklahoma. This is a state that saw steep declines in oil production as natural gas became the dominant resource. Price declines for gas motivated energy firms to go after oil.
The Wall Street Journal reports that the North American oil boom “is acting as a shock absorber to global price hikes ...” This means a problem in the North Sea doesn't mean a supply disruption will push up prices here. It happened in January when a temporary pipeline shutdown kept North Sea oil from leaving massive offshore production platforms. Such a disruption would have once sent prices higher. Instead, they actually declined.
Often forgotten when discussing imports is that oil doesn't come only from countries with unstable or hostile governments. Some of it comes from friendly countries. The friendliest of all is Canada. Its oil sands reserves are vast and ready to supply U.S. refineries if a green light is given for the Keystone XL pipeline.
The Obama administration demonstrates that sometimes you can have things both ways. The president benefits politically from a stable supply and price environment. Previous presidents had to contend with volatile pricing and supply disruptions, including the notorious Arab oil embargo in the 1970s. At the same time, Barack Obama can pander to environmentalists by delaying a decision on the Keystone pipeline.