Saudi Oil Field Explosion Causes Oil Prices to Surge
Explosion at the Abqaiq plant in Saudi Arabia. Image: Reuters
On Saturday, a Houthi rebel attack on a prominent Saudi oil field caused global oil prices to surge. As CNN reported “Several projectiles struck the Abqaiq plant, starting a series of fires that quickly took out nearly half Saudi’s oil production — 5% of the global daily output — and sparking fears about the security of the world’s oil supplies. It’s unclear when Abqaiq, which is operated by Saudi giant Aramco, will be fully operational again.” Additionally, President Trump announced via tweet on Sunday that he has “authorized the release of oil from the Strategic Petroleum Reserve, if needed, in a to-be-determined amount….”
The Effect: As the Washington Post explained, as a result of the explosion, “U.S. crude oil jumped $5.61 per barrel, or 10.2%, to $60.46 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, surged $7.84 per barrel, or 13%, to $68.06 per barrel.”
Why This Matters: Every time there is a conflict in an oil-producing nation it sends reverberations around the world for how energy costs might be affected. According to the IMF, the world spends $5.3 trillion/year on fossil fuel subsidies, in part to stabilize energy prices and in the United States alone our military spends about $81 billion/year to protect oil supplies around the world and keep fossil fuels flowing into American gas stations.
Point being, there’s so much money being spent protecting oil assets at the same time that most Democratic presidential candidates are proposing either the elimination of fossil fuels from our mix entirely (Bernie) or are proposing multi-billion and even trillion-dollar investments for renewable energy technology to drastically reduce our reliance on foreign oil.
The question here is, how will a clean energy future shape our geopolitics in the Middle East if the US is no longer in the business of protecting foreign oil assets? Just about every Democratic candidate has a climate action plan that gets the United States to AT LEAST net-zero carbon emission by 2045 (2050 at the latest). Even if net-zero doesn’t mean full decarbonization (with net-zero carbon offsets are still allowed) these plans have a clear vision of a grid designed to accommodate renewables, increased infrastructure for electric vehicles and investment in battery storage. With these plans, we’ll be able to meet the vast majority of our energy needs through domestic production. Without explicitly stating so, our national dialogue around climate change is already giving us a snapshot of how we might reorient our spending, troop deployment, and foreign policy priorities when it comes to Saudi Arabia in the next several decades.