April 2, 2015
Hello everybody out there in farm country. This radio commentary is brought to you by Monsanto, and John Deere. They are all friends, supporters, and allies of a healthy farm economy and prosperous rural America. Thank you.
And now for today’s commentary—
What was the biggest thing that happened last year – was it the endless turmoil in the Middle East, or Putin’s incursion into Ukraine, or the price of corn cut in half? None of the above. It was the price of oil cut in half. From $100 per barrel to $50 in 8 months.
According to the Holman Jenkins writing in the Wall Street Journal, “If not for fracking, oil would be $200 a barrel and gasoline $6.50.” The new technology extracting oil and gas has changed the world overnight.
Look back to the early 1970s when President Nixon imposed an export ban on oil. We were in an oil panic because the world was running out of oil. Since that time, we have spent billions of dollars in the Middle East – the world’s biggest supplier of oil. Saudi Arabia and the other big energy-producing countries formed a cartel to fix the price. Not any more. The world is awash in oil. The U.S. is positioned to become the biggest producer in the world. Forget the Middle East. There is no shortage of oil in the world and there won’t be. The rising price of oil called for creative technology in extraction. Markets work.
Think about the consequences of cheaper energy. Our consumers have a lot more money to spend on other things. The U.S. will not be forced to import as much oil. In fact, we should end the Nixon oil embargo that is still in place after 40 years. Russia was fat and happy when oil was expensive since that country’s biggest exports are oil and gas. Now, Putin’s Russia is in all kinds of financial trouble. The Venezuelan government (not any friend of ours) (a big oil country) is in free fall. And, of course, the Middle East, where we have fought more wars than I like to think about – those wars were all about protecting our energy supply – who cares about the Middle East now?
Let’s take care of things here at home. Get the tractors and planters rolling on our cheap fuel. Nitrogen will come down in price because it is made from natural gas. Spring is coming. It’s time to plant.
If you would like to review my radio shows going back more than 20 years, just go on-line to www.johnblockreports.com. Have a great weekend. Until next week, I am John Block from Washington, D.C.