As Sunni radicals push toward Baghdad and threaten Iraq's oil fields, crude prices are steadily climbing. Once again, turmoil in the Middle East is being felt in oil markets around the world.
Disruptions in oil supplies from Libya, then Iran and now mayhem in Iraq OPEC's second largest crude-oil exporter next to Saudi Arabia - have pushed world oil prices (Brent North Sea crude oil basis) to a nine-month high of $114 a barrel, and U.S. prices (West Texas intermediate crude) to $107 a barrel. The good news is that the price could be $20 to $30 a barrel higher if it weren't for the U.S. shale revolution.
U.S. oil production is playing a huge role in restraining oil prices. Since 2011, the U.S. has added 2 million barrels per day of oil production onto the global marketplace. That surge in production, along with record production from Saudi Arabia, has made up much of the slack left by a never-ending string of supply disruptions and shortfalls coming from OPEC member states.
Thanks to the shale revolution, U.S. oil production is at a 28-year high. Production has grown by leaps and bounds from the Bakken shale in North Dakota, Eagle Ford shale in Texas and a number of other emerging plays including the Utica shale in Ohio. This growth, unforeseen less than a decade ago, has reversed decades of falling domestic production.
Despite talk of reducing our dependence on overseas sources of oil following the oil shocks of the 1970s, our reliance on OPEC, only grew. The shale revolution has finally helped reverse that trend. As recently as 2005, we were importing 60 percent of our oil. Last year, that number fell to just 32 percent and with U.S. oil production expected to grow by another 1 million barrels per day this year, U.S. dependence on foreign fuel will continue to recede.
Some sources estimate that the U.S. has the potential to reduce its dependence on foreign oil to zero by the end of 2015.
New shale production, and consequently our falling dependence on imports, is reducing our trade deficit, generating hundreds of thousands of new jobs, including many here in Ohio, and improving our energy security. Our allies, too, are benefiting from our growing production, since it acts as a buffer against oil price spikes.
Ensuring that U.S. production continues to grow must be a priority. Largely standing in the way to that growth is localized opposition to new drilling. Concerns about hydraulic fracturing - the technique that provides the key to coaxing oil and natural gas from shale formations - appears at the root of that opposition and must be addressed.
Much of that opposition is based on misinformation about fracking, a technique used in more than 1 million oil and gas wells with scarcely any problems since the 1940s. Moreover, fracking is being continuously improved through the use of better well casing, environmentally compatible frack fluid additives, waste-water recycling, and measures to reduce local truck traffic.
At stake in shale production are billions of dollars in investment and tens of thousands of jobs, all tied to our ability to reduce our reliance on foreign oil.
The global need for oil continues to grow. Emerging middle classes in China, India, and a half dozen other burgeoning economies are ensuring that. The question is can new oil production keep up with demand?
The International Energy Agency is counting on Iraq to provide half of the world's new oil supply by 2035. But as sectarian violence spreads across the Middle East, the world will be better off if the United States assumes the mantle of leadership in energy production.
At the same time, increasing shale oil and gas drilling can help hold down energy costs for consumers and businesses, thereby sustaining our nation's dynamic economy.
(Chase is chair and professor of the department of petroleum engineering and geology at Marietta College.)