A drone missile attack on oil production in Saudi Arabia has knocked 5.7 million barrels of production offline, roiling oil markets. This new attack follows a summer in which oil tankers were repeatedly attacked on their way out of the Persian Gulf.
The escalating conflict highlights the risks that come with heavy reliance on foreign oil imports. California produces less than 30% of the oil it consumes every day to power businesses, grow food, and fuel our transportation. The rest comes from overseas – and much of it from the region currently embroiled in an intensifying armed conflict involving global energy supplies.
Oil markets are alarmed, and significant cost fluctuations including oil price spikes have already occurred. As the New York Times reported earlier this week: “Fixing the damage done by the attack on the Saudi oil processing plant may be the easy part. The hard part will be calming energy markets, where oil prices have jumped faster than at any time in over a decade.”
Indeed, the Saudi attack resulted in the largest one-day price shock since Hurricane Katrina shut down production along the Gulf Coast in 2005. And analysts see further risks ahead. “The psyche has been altered,” Tom Kloza, global head of energy analysis for Oil Price Information Service, told the Times. “Now you have the thought, ‘What if the other shoe drops and we have a wider conflict?’”
Dragan Vuckovic, president an oil service company that works in Egypt and Iraq, added: “This changes the oil markets psychologically for a couple of years for sure now that everything is shown to be vulnerable. One drone can hit a refinery or an oil-field installation and that causes fires, destruction and stops all production. It means less oil on the market and higher oil prices.”
Yet, despite the clear and ongoing risks of relying on foreign energy supplies, activist groups are pushing for California to end in-state production – and depend even more on unreliable foreign oil imports. This activist agenda puts California’s economic security at risk, exposing our residents and businesses to unpredictable price spikes and energy shortages.
As volatile and escalating conflict in the Middle East continues to impact global energy markets, now is not the time to be curtailing oil and gas production in California, where oil and natural gas are produced under the most stringent environmental and public health standards in the world.
The record is clear: if California wants a safe, reliable, and affordable source of energy, it must produce more – not less – of the oil it uses every day.