Thanks to Fracking, No Panic in the US After The Attacks on Saudi Oil

by Paolo von Schirach –

WASHINGTON – The most astonishing consequence of the unprecedented, devastating attack on Saudi Arabia which crippled the Kingdom’s oil production and refining facilities is what did not happen, especially in the USA.

There was no panic in the US or worldwide; no skyrocketing, out of control oil prices. Yes, crude prices went up, significantly; but not in a dramatic way, if you consider that the supplies of Saudi Arabia, the leading world exporter, (along with Russia), have just been cut down by 50%! That 50% represents 5% of total world supply. In an environment where strong demand matched tight supply, this sudden shortfall would be a disaster, especially for the US, along with China the leading oil consumer. But right now world oil supplies are not stretched, notwithstanding steady demand, thanks to the US fracking revolution which added millions of barrels of oil a day to global energy markets. More on this in a moment.

Surprise but no shock

Obviously, world markets took this unexpected and sadly successful attack against well defended (we all thought) and vitally important Saudi oil facilities quite seriously. But again, there was no panic; no stock market crazy gyrations. In contrast, you can rest assured that if the very same attack on Saudi Arabia had taken place 10 or 15 years ago, the reaction would have been chaos and mayhem –especially in Washington, DC and on Wall Street. Similar shortfalls caused the oil crises of 1973-74 and 1979.

What happened in the last 15 years?

So, what is the difference between now and then? The difference is the US fracking revolution. The almost unthinkable surge in US oil and gas production made possible by the adoption of fracking technologies by many US energy companies , (a successful combination of hydraulic fracturing and horizontal drilling), which began 10 to 15 years ago has given the United States millions of additional barrels of oil a day; and, as a consequence, also a much higher degree of energy self-sufficiency. Not total self-sufficiency, mind you, but close. Heavy reliance on distant (and it turns out not so reliable) oil suppliers was drastically diminished along with massive increases in domestic oil production. 

The broader impact of the US fracking
revolution

This gigantic increase in domestic oil and gas production made possible by extracting oil and gas from shale formations, coupled with increased oil imports from Canada, a friendly neighbor, have created a new scenario of quasi “Hemispheric Energy Independence”. In simple terms, North America, (Canada, USA and Mexico combined), can soon become energy self-sufficient.

Let’s be clear, we are not there yet. But we are almost there. The US still imports some OPEC oil, as well as crude from other regions of the world, but most of the oil we consume now in America is either domestically produced or imported from reliable neighbors.

Relaxed atmosphere

Hence the relatively relaxed atmosphere both in Washington and on Wall Street, in the aftermath of the attack on Saudi oil facilities, when it comes to confidence in our ability to ensure continuity of energy supplies to industry and consumers.

Notwithstanding the shockingly bad news of the brazen attacks that knocked down half of Saudi Arabia’s oil production and refining facilities, with the ensuing cuts in global supplies, there is no panic in America.

This is an incredibly important achievement. And we owe this to a multitude of small, medium and some large fracking companies that are behind this American energy revolution.

Global benefits

And the fracking revolution obviously benefits the rest of the world as well. Since America’s imports have been cut down by millions of barrels a day, there is more oil in the global market place available to all other importers. Abundant supply means lower energy prices for all, ample reserves, and (almost) guaranteed deliveries to all importers.

So, here is the story. Thanks to fracking and massively increased US oil production, even an unprecedented, catastrophic event like the attack on Saudi oil facilities can be handled without resorting to extraordinary measures such as price controls, rationing, etc.

A private sector effort

Where am I going with all this? Very simple. Fracking was not a US government program. Fracking is all about old fashioned Yankee ingenuity. The US private sector, often small energy entrepreneurs, largely unhindered by suffocating state or federal rules and restrictions, had the freedom to invest in drilling in shale –an endeavor what at the beginning seemed to most experts a perfectly crazy idea, destined to failure.

Well, the seasoned experts were wrong. After a few years of trial and error, the daring energy entrepreneurs were proven right, and America now –thanks to fracking—is in the midst of this incredible “Energy Renaissance”. This huge additional domestic production, in this moment of international bewilderment caused by the brazen attacks on Saudi oil facilities, provides precious support and reassurance to both the US economy and US national security.

Broader lesson: encourage free enterprise

So, here is the broader lesson. As a Nation, let us do all we can to encourage more innovation and entrepreneurship –in all sectors. Do not place roadblocks on the path of those who seek to create new products, new systems and new solutions. And I am not just talking about energy here. I am talking about all economic sectors.

Sure, all
economic activities have to be conducted within the boundaries of the law,
while they have to comply with all necessary safety and public health
standards. These are the common sense rules of a modern, civilized society.
But, once reassured that there is genuine compliance with the basic norms of
our nation, let people be free to do what they want to do.

In the case of fracking we see the enormous economic and now national security benefits brought about by daring spirits, ingenuity and enterprise. About other economic sectors, God only knows what new benefits commercially viable innovation may bring to us. 




America Lost Its Ill-Conceived War in Afghanistan

WASHINGTON – The longest American war is finally coming to an (unhappy) end. America is negotiating its departure from Afghanistan. A draft deal sketching a time line for US troops withdrawal has been hammered by US Envoy Zalmay Khalilzad and the Taliban.

Good news? Not really. Let’s be clear. America is not negotiating from a position of strength, after having inflicted painful losses on the Taliban, our enemy. This is not a carefully crafted peace treaty, with credible built-in conditionalities and safeguards. Whatever the wording of the final agreement, whatever euphemism you may choose to characterize this peace process, this is in essence US surrender.

Inglorious end

It is clear to all observers that America is negotiating with the Taliban from a position of extreme weakness. The other side, the Taliban, is winning on the ground, and we simply cannot take this nightmare of daily attacks followed by feeble and ineffective Afghan responses anymore.

Sadly, this is the inglorious end to a terribly ill-advised October 2001 US invasion of Afghanistan, followed by an ill-conceived military occupation, and an even worse economic development strategy concocted under the assumption (bordering on lunacy) that America and its NATO Allies had the resources, the will and the skills to transform an extremely backward, war-torn Afghanistan into an at least passable modern, working democracy.  

A bad idea

Sadly, this negotiation with the Taliban is the end of the American poorly planned and poorly executed adventure in Afghanistan. The occupation of Afghanistan was and is a bad idea doggedly pursued for almost 20 years by national leaders who should have known better; or who at least, after a few years of failures, could have paused and thought the whole thing over again.

Foreign
policy mistakes unfortunately happen. But Afghanistan is much worse. This is
about hatching a completely unrealistic plan and then clinging to its failed
policies, year after year, in the vain hope that –maybe—someday things will
improve, without any evidence that anything was getting any better.

It all started after 9/11

Let’s go back to the beginning of this sad story, and that is 9/11. After it became clear that this major terror attack against the US homeland had been directed by Osama bin Laden, the founder of al Qaeda who had found sanctuary in Afghanistan, the Bush administration decided “to go get him”. However, Washington almost immediately decided also on a much bigger agenda. Indeed, the Bush administration decided that it had to punish not just the al Qaeda leadership, but also its Afghan willing hosts, that is the Taliban government.

Therefore the more narrowly focused “punitive expedition against Osama and al Qaeda” almost immediately morphed into “regime change” for Afghanistan. This rather grandiose objective was in fact an act of vainglorious superficiality. In so doing, Washington, while trying to get Osama who was hiding somewhere in the mountains of Afghanistan, (without any success, by the way!), at the same time declared to the world that it needed to “fix” Afghanistan once and for all, so that in the future this sorry country would become a responsible, modern democracy, and no longer the friendly home of terrorists.

Insane policy

In
principle, this may sound nice: “Clean up
the place and engage in a make-over”
so that in the future Afghanistan will
not be used as a base for Islamic terrorists.
In practice, anybody with a brain at the time would have been able to see that
this –“fixing Afghanistan”– was a
next to impossible task.

Anybody with an even scant knowledge of decades of failure in trying to promote development in Africa and other under developed regions through large amounts of outside assistance could have pointed out that this was mission impossible.

Indeed, if promoting development in Africa is extremely challenging, it should have been clear to all top decision-makers that engaging in a development effort in an extremely poor, and completely ruined post-conflict Afghanistan would take extraordinary resources, and many, many decades.

A dauntingly
tall agenda, by the way, even assuming peace and a cooperative society willing
to buy into this rapid modernization strategy hatched and dished out by outside
experts.

Impossible goals

Again, everybody knew or should have known that at the end of 2001 Afghanistan was an incredibly backward, tribal country that lacked almost all the underpinnings necessary to even start a development agenda. And that includes: some meaningful productive activities, (no, poppy cultivation should not be on this list), at least some basic infrastructure,  a modicum of electricity generation and transmission, reasonably modern health care facilities, functioning schools, an educated middle class, a reasonably competent government. Afghanistan had almost none of that at the end of 2001. On top of that, it had suffered for years under a communist dictatorship, then it had to endure the Soviet invasion which was followed by a bloody war against the Soviets, and then civil strife followed by the medieval Taliban regime.

A record of failure

Anyway, the
whole US-led Afghanistan enterprise that began at the end of 2001 failed
–miserably. This is well documented. For instance, to this day, the US
government has no idea of what happened to billions of dollars targeted for
development in Afghanistan that simply vanished.

The biggest failure is of course the strong resurgence of the Taliban and the utter inability of the US-trained and equipped Afghan military and police to even hold their ground –let alone go after the Taliban insurgents and defeat them.

Right now, the Kabul government is unable to guarantee even a modicum of security almost anywhere in the country. The Taliban can hit almost city, including well defended targets in Kabul itself. On top of that, in the last few years, other extremists and terror groups have found fertile ground in Afghanistan. On a daily basis, there are attacks, bombs, suicide missions, and what not. And this is happening after 18 years of American and NATO military assistance, combined with gigantic development packages aimed at building a modern government, peace and new prosperity.

The negotiations with the Taliban

I guess this is why the Trump administration FINALLY decided to cut America’s losses and get the troops home. The fig leaf here are the bilateral “peace negotiations” with the Taliban. Through this charade hosted by Qatar, Washington would like to convey to the world that this is no cut and run. On the contrary, Washington will implement an orderly and careful incremental drawdown of US forces –but only if and when the Taliban will meet certain non-negotiable conditions.

The message
is: “This is no unilateral withdrawal. We
are negotiating an honorable and sound peace agreement. We Americans shall make
sure that the interests of the Afghan people are protected. We shall also make
sure that the new (and still fragile) Afghan democratic institutions will be
safeguarded and will continue to define the country long after the last
American soldier has departed”.

Of course,
this is pure fiction.

Whatever
they may say now, the Taliban leaders do not believe in either democracy or
power sharing. To believe in a well-functioning future coalition government featuring
the current Afghan leadership and the Taliban working together for the benefit
of the Afghan people is ridiculous. Which is to say that these negotiations are
only about saving face. Whatever you may want to call this process, in essence,
this is surrender. We failed –in a spectacular way– and now we are leaving an
impossible situation that cost US taxpayers hundreds of billions. No more good
money after bad.

What do we make of all this?

So, what do we make of this absurd tragedy? Sadly, the only plausible conclusion is that in the highly charged, emotional days after 9/11 our national leaders literally lost their minds. There is no doubt that the terror attack we suffered on September 11, 2001 was unprecedented in scale and loss of American lives.

But 9/11 was
not the end of the world. The notion that America, in order to prevent future
attacks and be safe, had to “redo
Afghanistan”
was megalomaniac and stupid. Going after the bad guys, the
masterminds of 9/11, was absolutely justified. But the notion that creating a
new country in Afghanistan was necessary in order to guarantee future US
security was fatally flawed.

And, by the way, let’s
not forget: even the more focused mission of capturing or killing the al Qaeda
senior leadership FAILED, TOTALLY. The US forces were there, on the ground.
Osama and his cohorts were on the run. And still we failed to capture Osama, for
more than a decade.

That said,
the Afghanistan operation was the beginning of the “War on Terror”, an ill-defined,
grandiose strategy that created what was ultimately an unreachable goal.

“War on Terror” does not mean
anything

Terrorism is not a place you can attack and conquer or a clearly identifiable enemy located in one place. Terrorism is a modus operandi that can be adopted by several small groups, or even isolated individuals all over the world. Terrorism is about dramatic violent actions that will gain a great deal of publicity.

How do you “win” this war? How can you ensure that all the bad guys, and the would-be bad guys, have been apprehended or killed? This is impossible. You can and should do your best to monitor and infiltrate terror cells. You should prevent when possible acts of terror and go after the bad guys when something bad tragically happened. But this is mostly about doing your best to manage an elusive threat using intelligence and special forces. You cannot “win” this conflict once and for all; just as police forces, even the best ones, cannot inflict a final defeat on all criminals and criminal activities.

There are more than 7 billion people on this planet. Even if the smallest fraction of this large world population engages in terror plots, you still have a problem. And yet this open ended goal –the War on Terror– became the fundamental pillar of US foreign policy under George W. Bush. America was committed to fight this global War on Terror to the very end, and we would not rest until the last terrorist had been killed or apprehended. This was and is an impractical, in fact fatuous goal.

No doubt, terrorism is serious business, to be treated seriously. And this is why we have sophisticated intelligence services and specially trained forces. But terrorism is not an existential threat that justifies making it into our number one national security priority, engaging in a global war in which the entire world, by the way, has to actively participate in order to show that they are with us.

Wrong policies continued under Obama

But here is the thing. The stupidity of that Bush administration policy did not disappear when President Bush left office. What is bizarre and unexplainable is that even though George W. Bush left the stage in January 2009, and no one talked about his War on Terror anymore, the failed Afghanistan project that was an integral part of the initial War on Terror strategy kept going, and going.

Indeed, President Obama declared that the war in Afghanistan was the good war that needed to be fought, as opposed to the bad war in Iraq that was discretionary and ill-advised. And so Obama, the Nobel Peace Prize winner, kept going and going in Afghanistan even though he and his team should have known better. After all they were not bound to justify and continue on a flawed commitment created by the previous administration. And it took Trump, the president elected with the open pledge to end all the stupid wars started and continued by his predecessors, more than two years to finally come to grips with the need to end this madness.

Taking stock

So, here is the balance sheet. It took 18 years to finally recognize a colossal foreign policy mistake. How could America be so wrong for such a long time without any serious debate on this record of failure followed by more failure? How could this happen? I am not entirely sure. Still, as a minimum we need to recognize that there is a nefarious inertia, combined with mental laziness, enveloping the entire upper layer of the analytical and decision-making centers of this nation.

In Afghanistan, America started something big and expensive with all the wrong assumptions regarding the size and scope of the undertaking and a realistic time line to achieve the stated goals. Alright, mistakes are made.

But then, how can we justify that Washington, despite a solid record of failure in Afghanistan, kept going and going, year after year, without anybody in a position of power and responsibility pausing and asking the most elementary question: “Is this really working as intended?”

American policy-makers lost the
ability to reflect

Here is my conclusion. As a nation, notwithstanding hundreds of billions of dollars spent every year on intelligence gathering, scenario planning, and war games, not to mention the largest defense budget in the world, we seem to have lost even a modicum of self-reflection ability.

An outside observer looking into this mess might find this record of systemic failure by the leaders of the most advanced country on Earth, and the attendant epic waste of resources stemming from totally misguided policies, quite funny. But it is in fact tragic. In the end, finally getting out of Afghanistan is a good thing. But I am not sure that America’s leaders learnt any enduring lessons.