There is a very important showdown occurring between Saudi Arabian and American oil producers. The Saudis are pumping more oil than they really need to because they are trying to flood markets and drive down prices, thereby driving American producers out of business. Many of them are the so-called frackers. Then when enough American producers go out of business, the Saudis will raise oil prices again. We’ll be hooked again.
This is seriously bad because we know now that the Saudis have funneled billions of dollars into the Wahabi brand of Islam. They have built mosques and funded programs throughout the Islamic world to promote this radical and negative version of Islam. Whether they actually have given money to the Islamic State and/or al-Qaeda is beside the point. The Saudis have created the environment that supports them.
So here we are, a market economy, where we don’t believe in the government supporting individual oil companies. The Saudis don’t have that problem. They are sitting on hundreds of billions of dollars and their oil industry is government-controlled. They can adopt the strategy of burning some of their financial reserves now and wait until the Americans, who believe in the free market, let their oil companies go bust.
Here’s where the Wall Street Journal has a great idea in this editorial. The U.S. government does not currently allow the U.S. oil industry to export its products, with a few exceptions. But if the government were to lift that prohibition, the financial strength of the American oil industry would surge. They would be better able to withstand the price war that is raging.
This wins on several levels. It may not be great for the American environment, but I think that consideration is outweighed because it would strengthen the U.S. economy and deprive the Saudis of the billions of dollars they will make if we let our industry fail. And we know what they will do with that money–they will feed at least some of it to the people who are hell-bent on destroying us.