Rich Lowry devotes his latest National Review Online column to giving thanks for those who pushed a “drill, baby, drill” policy.
The old Republican rallying cry “drill, baby, drill” was supposed to be simplistic sloganeering masquerading as policy.
It turns out that it represented transformative wisdom. The fall in the price of oil — about 40 percent in the past several months, down to less than $70 a barrel — is largely the result of the U.S. drilling, and then drilling some more, baby.
Big drops in the price of oil usually accompany recessions and are caused by declining demand. Not this one. Lackluster demand from Europe and China is a factor, but the driver is the American shale boom that is perhaps the most wondrous national achievement of the past decade.
No one would have predicted it. To the contrary, experts predicted the opposite. In 2008, the International Energy Agency was projecting U.S. production would decline or remain flat for decades. Prior to the recession, the price of oil peaked at nearly $150 a barrel, and with global demand rising, it looked like it would remain at an elevated level forevermore.
But now the U.S. is producing over 3 million barrels a day more than it did several years ago. As Robert Bryce of the Manhattan Institute points out, this is like adding another Kuwait to world oil production. The Marcellus Shale in Pennsylvania alone, he writes, has added another Iran to world natural-gas production.
Perhaps President Barack Obama can be forgiven for not understanding the consequence of this, given his attenuated understanding of complex market forces — like supply and demand. As recently as 2012, he was confidently asserting that “we can’t just drill our way to lower gas prices.” Drivers enjoying the $1 drop in the price of gas since May might beg to differ.
