2015 has been a pretty bleak year for the country. Labor force participation remains at a stubborn four-decade low and even The New York Times admits that we are 2.8 million jobs behind pre-recession levels of employment; the economy is so “fragile” that even a ¼-point Fed rate increase is treated like a live hand grenade. ACA enrollment has yet to meet any predictions, despite multiple extensions and two gifts from the Supreme Court. The Iran deal was so laughably one-sided that the Administration made sure that Democrats would not even have to vote on it. And now, with terrorists spraying bullets and bombs in California and France, we have only a climate change photo-op to oppose it.
But there is one immense Christmas present under the White House tree and on the doorstep of every American household. The fracking revolution wrought by the U.S. oil industry (without any help from the Administration) has resulted in every American family having at least $1,000 in extra spending money. It’s better to be lucky than good; President Obama has dodged one bullet and he has the Saudis and the U.S. oil industry to thank. That technology leap developed by the “oil barons” spurred an increase in domestic production that the Administration retarded wherever possible (by stonewalling and stalling drilling permits on federal lands, where production has not increased). It caused the Saudis to open the spigots to protect their turf. So, instead of $90 a barrel, we’re at $40 a barrel. By a very conservative estimate, every family has approximately $1,000 in extra spending money — due explicitly to the decline in gasoline prices.
Here’s the math. American households average well over 20,000 miles driven each year. Let’s take the low figure. Household vehicles (allegedly) average 20 miles per gallon. No one who actually drives a car really believes that the current U.S. household vehicle gas mileage average is this high, but let’s take it on faith. Those figures work out to every household buying at least 1,000 gallons of gas per year. Gas is a dollar cheaper than a year ago, and that will continue. As early as January 2015, GasBuddy.com senior analyst Patrick DeHaan predicted that plummeting prices would save U.S. motorists about $97 billion overall this year, or about $750 per household. But that number was based on gas prices averaging $2.64 per gallon, when oil was about $53 per barrel. The real number for 2015 is roughly 60 cents less, barely above $2.00 a gallon … i.e. 25% lower. So households have at least $1,000 extra in aftertax money, to save or spend as they wish. That is what has helped average Americans and their pocketbooks.
Once the Saudis moved to open the taps in response to the U.S. fracking revolution, the price dropped. And dropped. And dropped again. So the much-maligned Saudis have also screwed the Russians, the Iranians, and the Venezuelans, all of whose malignant regimes depend on petrodollars for their schemes. You think Putin and the Iranians have had us over a barrel this year? Well, they have, but think how assertive they would have been were it not for the villainous U.S. oil industry. Forty-dollar oil is crushing the bad guys. Think how bad things could have been if Putin’s, Khamenei’s, and Maduro’s coffers were being topped off by selling $90 oil instead.
So, thank you, ExxonMobil. Thank you, frackers.* Thank you, King Salman.
*In particular, Texas and North Dakota. Neither of those states voted for Obama in 2008 or 2012, and the President surely doesn’t spend much time worrying about whether their economies are now in freefall. But he (and we) should at least acknowledge the gift they have bestowed upon the country.