Lower oil prices are great for consumers. They’re also bad for America’s enemies, as Daniel Wiser reports for the Washington Free Beacon.
U.S. adversaries that rely on oil exports to boost their economies are feeling the pinch of lower prices. Oil revenues account for significant portions of the budgets in Russia, Iran, and Venezuela.
William Yeatman, a senior fellow in energy policy at the Competitive Enterprise Institute, said that factors such as Middle East conflicts have historically contributed to price shocks. But the United States is now playing a more influential role on the supply-side of world oil markets.
“In spite of terrible strife [in the Middle East], in addition to other global emergencies (i.e., instability in eastern Ukraine and Ebola afflicting western Africa), the price of oil is declining,” he said. “There seems to have been a structural shift and the likely cause is the incredible growth in American oil and gas production, itself due to the advent of technological breakthroughs in drilling collectively known as ‘fracking.’”
Russian President Vladimir Putin on Friday appeared to brush aside concerns of lower oil revenues, noting that “winter is coming.” European countries rely on natural gas from Russia especially in colder months.
Still, falling oil prices have driven the Russian currency to its weakest level since the fall of the Soviet Union. Western sanctions imposed after Russia’s destabilizing actions in Ukraine have also hampered its economy.
Additionally, Russia has been accused of funding anti-fracking protests in countries such as Romania and Lithuania—leading to suspicions that the Kremlin is using clandestine measures to prevent U.S. oil companies from stealing its market share.
In the Middle East, some members of the Organization of the Petroleum Exporting Countries (OPEC) were reportedly not pleased with the group’s recent announcement that it would hold off on cutting oil production, a move that could raise prices. Iran’s oil minister said his country did not protest the decision but added that it was not “beneficial to all OPEC member countries.”
