I took a gap year after college, and I decided to spend the winter in Jackson Hole, Wyoming.
When I left from just south of Houston, I drove 700 miles the first day and spent the night in… Texas. Amarillo, to be exact.
Texas is a big state.
When you enter Texas from Louisiana on Interstate 10, there’s a sign that reads “877 miles to El Paso.”
The people of the Lone Star State like to say that everything is bigger in Texas. Bigger trucks, bigger houses, whatever. Well now they can add something else to the list.
Granted, Texas has always had oil, but with the fracking revolution, more of the black gold is flowing than ever before, and the pace is set to increase yet again.
If Texas was an independent country (which many people here would like to see), by next year it would be the third-largest oil producing nation on the planet, behind only Russia and Saudi Arabia.
Now, granted, the numbers aren’t close.
Russia and Saudi Arabia are expected to pump between 11 and 12 million barrels a day next year, and Texas will produce less than six.
But still, the increased production in Texas will put it ahead of both Iran and Iraq.
In fact, so much oil is moving through the Lone Star State that the Intercontinental Exchange will offer an oil future based on Houston prices sometime this quarter.
Until now, the closest pricing was in Cushing, Oklahoma, which is the traditional place to measure inventory and prices. But in 2015 President Obama lifted the 40-year ban on U.S. oil exports and we started shipping oil overseas, mostly through Houston.
In June, U.S. oil exports touched a record high of three million barrels a day.
They’ve since settled back to two million barrels per day, but that’s still a lot of oil.
Shale producers across the country are pumping out almost 11 million barrels per day, which means the U.S. will produce a record amount of oil this year.
So much oil has strained the transportation system. Producers cannot get their product to market, which leads to price gyrations.
Recently, oil prices in Midland, Texas, were $12.99 less than at Cushing simply because of the excess supply sloshing around West Texas. But that’s OK. We’ll work out the kinks in the process.
A quick review of the Texas Railroad Commission report on new pipeline construction in 2018 shows more than 500 miles of just crude pipeline construction underway. And yes, in Texas the Railroad Commission overseas oil and gas. Go figure.
When the kinks are worked out of the system, Texas in particular and the U.S. as a whole will be among the biggest energy players in the world. As we gain dominance other producers lose their place of privilege.
This will mean that we have fewer reasons to be involved in squabbles in the Middle East, where countries have been laughing at us for more than 50 years as we talk about democracy and freedom and then ship them U.S. dollars that they use to attack our allies and oppress their own populations.
As oil became the fuel that powered the world, it also became a weapon to be used as suppliers saw fit.
Well, the world is about to see what happens when the U.S. doesn’t need energy from other nations and can choose to turn its attention elsewhere.
Something tells me they’re not going to like it, and that suits me just fine.