US. independence from foreign oil could be achieved during’s Trump presidency, according to a major figure in Russia’s energy industry.
Rising U.S. energy production could stabilize the global oil market, especially if the U.S. and Russia work together against the Organization of Petroleum Exporting Countries (OPEC), according to Igor Yusufov, Russia’s former minister of energy from 2001 to 2004.
“On the White House page we can read The First Energy Plan of the Trump Administration setting as a goal the achievement of the energy independence from OPEC,” Yusufov told The Daily Caller News Foundation. “It is for sure quite realistic keeping in mind another American intention to boost shale oil and gas production both for internal needs and export.”
America’s will already be “tantalizingly close” to energy independence when Trump’s first term ends in the year 2020. The U.S. imported 65.3 percent of its oil in 2005, but the U.S. only imported 24.2 percent in 2015. The U.S. will import just 11 percent of its daily oil needs by 2020, according to CNN Money.
Russian oil production was surpassed by the U.S. in 2015 largely due to hydraulic fracturing, or “fracking.” America is now the world’s largest and fastest-growing producer of oil and natural gas. U.S. oil production in 2015 was 80 percent higher than it was in 2008.
“[Y]ou can flood oil markets with cheap oil without feeling any profit,” Yusufov said. “Just imagine: the elevation of the crude price to $10 brings into the Russian state budget nearly $29 billion. So we have to state, that the so called OPEC+ reduction by 1.8 million barrels per day announced last December is a market- wise measure aimed mainly on stabilization of the markets.”
U.S. sanctions enacted by Obama have combined with low global oil prices to be a “perfect economic storm” to hurt Russia, according to the private intelligence firm Stratfor. Even the Russian government is worried, slashing its growth forecasts and predicting that the economy will fall into recession.
Russia’s economy will continue shrinking even if oil prices recover to $80 per barrel, according to the Energy Research Institute of the Russian Academy of Sciences. The current price of a barrel of oil is hovering around $53. The International Monetary Fund predicts the Russian economy shrunk 3.4 percent last year, the most of any major emerging market. The Russian central bank previously predicted that if oil prices remain below $50 a barrel the economy could contract by up to 6 percent.
Russia’s situation could improve if oil prices stabilize and begin to increase, possibly through an OPEC agreement or pact with the U.S. OPEC announced in late November that it will cut oil production, causing the price of oil to rise, which would mitigate Russian losses. Several OPEC member nations are already defying the agreement.
“In my opinion this is well understood by Mr. Tillerson whom I have the honor to know personally since 2002 as a strong and straight-forward negotiator (and now politician),” Yusufov continued. “And Russia could be a bridge in the global dialogue on oil markets stability – believe me, we are for sure totally independent from OPEC!”
Russia may run out of money by mid-2017 due to low oil prices, and the country’s reserve funds could exhausted entirely within the next six months unless the price of oil substantially rises. In 2013, crude oil exports accounted for 68 percent of total export revenues, and low prices mean less revenue to fund the country’s domestic and foreign policy agenda. The country’s petro-economy isn’t diversified enough to make up the budget shortfall through other means.
Meanwhile, the U.S. could still substantially increase oil production. Opening U.S. federal lands for natural gas, oil, and other drilling would create 2.7 million jobs and add $663 billion to the economy each year for the next 30 years, according to a new study published last December by Louisiana State University and the free-market Institute for Energy Research (IER).
Opening up federal lands and waters would also lead to $5.1 trillion in new wages and $3.9 trillion in new federal tax revenue over the next 37 years, according to the research. To put these numbers in perspective, the US military budget in 2015 was $598.5 billion.
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