Nicolette Nye: The oil market is flooded, let’s prepare for the drought

washington examiner resize-01Washington Examiner | October 27, 2016 | Nicolette Nye

With gasoline prices low, it’s tempting to kick the figurative can down the road when it comes to U.S. energy policy. The urgency to provide access to the nation’s vast offshore oil and natural gas resources isn’t what it once was when oil prices sat at $100 per barrel, or more and the price for a gallon of gasoline was $4 or more. But make no mistake, now is precisely the time to get our energy policies in order.

Higher oil prices are coming. It’s a matter of when, not if. Despite increased energy security from domestic oil and natural gas production due mainly to the shale revolution, the U.S. remains beholden to the global oil market. Supply disruptions in the Middle East, geopolitical maneuvering by an unsavory regime or the whims of OPEC can create a price shock at the gas pump. OPEC, in particular, has the potential to remain a thorn in our side.

OPEC recently announced that its member nations will cap and then reduce their oil production to drive up oil prices. The drive for these petro states to inflate oil prices is pressing. For many of them, low oil prices have decimated state revenues which are the foundation of their economies. Venezuela, now on the brink of collapse, is a case in point.

But it’s not just OPEC decisions or geopolitical instability that signal a coming rise in oil prices. New oil discoveries and surging production in the U.S. over the past half-decade have been anomalies in a world where oil discoveries across the globe are at a 70-year low. In most regions of the world, it’s becoming more difficult and more costly to find and produce oil, which is still a lifeblood of the global economy.

Global energy demand will only increase in the coming decades; the U.S. Energy Information Administration projects that by 2040 fossil fuels will still supply around 80 percent of energy needs globally. We need U.S. oil production more than ever. While attention has focused largely on our onshore shale resources, we cannot take our eye off the ball when it comes to offshore energy. Oil still accounts for more than 90 percent of the energy we use to power transportation. We have the resources offshore to ensure we can provide additional oil production to balance the market should oil prices rise. However, federal energy policy, particularly our offshore energy policy, keeps too much of those resources locked up.

Read the full op-ed here.

Nicolette Nye is vice president of communications and industry affairs at the National Ocean Industries Association, and a retired U.S. Navy chief petty officer