Column: Markets and Consumers, Not President, Control Oil's Future

by Brent Sohngen (Columbus Dispatch) ...When Joe Biden exclaimed that he wanted to transition the American economy from oil, the opposition pounced. I must say, I was a bit surprised by the uproar over the former vice president's comment, given that every American president since the Arab oil embargo in 1973 has tried in vain to reduce our dependency on oil.

They have tried everything, from banning crude oil exports, to instituting fuel efficiency standards in automobiles, to subsidizing alternatives like ethanol made from corn, cornstalks, and even trees. Heck, government even subsidized diesel made from cooking oil. Of course, none of these things actually worked. Only high prices back in the 1970s, which ushered in a recession in the early 1980s, lowered net imports for a time.

But something changed in the early 2000s, having a lot to do with markets and innovation and little to do with anything any of our presidents did. As oil prices rose due to economic growth in China, fracking became economically feasible on a large-scale basis in the United States. Investors who spent massive amounts of money drilling wells in exotic places, started looking to North Dakota and Texas.

At first, the money trickled in, but then it flowed, and with it the U.S. oil economy exploded, driving production up and costs down.

Over the decade from 2008 to 2018, U.S. crude oil production more than doubled, and we once again became the world's largest producer.

But if I was an oil company, I would be far more worried about consumers and markets, because they are infinitely more powerful than presidents.

Right now, consumers are sending strong signals that the future won't be like the past. Oil prices are down, and not just due to the pandemic. Efficiency is up and electric cars are building market share because renewables and natural gas have driven electricity prices down.

People in smog-choked cities around the world can gain relief by substituting electric cars for gasoline.