Federal Lands Drilling Daily Update (+Middle East War)

Resolved: The United States ought to prohibit the extraction of fossil fuels from federal public lands and waters.

The US gets 24% of its oil from federal lands and waters, it’s the 11th largest oil producer in the world

Lem Smith, American Petroleum Institute, March 24, 2022, https://www.api.org/news-policy-and-issues/blog/2022/03/24/drilling-down-on-federal-leasing-facts.

The Truth: Oil production from federal lands and waters provides approximately 24% of total U.S. oil production. Additionally, natural gas production from federal lands and waters is approximately 11% of total U.S. natural gas production Size and Scale: To put the data in perspective, if U.S. federal land/waters was treated as its own country, the 2.67 million barrels of oil it produced daily in 2019 would have made it the 11th largest daily oil producer in the world that year.

Current US energy independence prevents the Israel-Hamas war from spiking energy prices and destroying the global economy

Sargen, 10-13, 23, Nicholas Sargen, Ph.D. is an economic consultant with Fort Washington Investment Advisors and is affiliated with the University of Virginia’s Darden School of Business.  He has authored three books including Global Shocks: An Investment Guide for Turbulent Markets, The Hill, This time around, war in Israel shouldn’t upend the market, https://thehill.com/opinion/finance/4252553-this-time-around-war-in-israel-shouldnt-upend-the-market/

One of the most significant developments impacting the global economy was the Yom Kippur War in October 1973. When Egyptian and Syrian forces attacked Israel to regain territory lost in the Six-Day War in 1967, the U.S. government sided with Israel. Arab members of OPEC responded by imposing an oil embargo that curbed world oil supplies by 4 million barrels per day.   During the First Oil Shock that ensued in 1973-74, oil prices quadrupled and contributed to a spike in global inflation and a significant tightening of monetary policies by industrial countries. The result was the most severe recession in the post-WWII era until then and a sell-off in world financial markets. The volatility during this period effectively ended any hopes that the Bretton Woods system of fixed exchange rates could be resurrected. By comparison, the response of financial markets following unprovoked attacks by Hamas on Israel has been modest thus far. Oil prices rose by 4 percent on the news, but they have subsequently eased, and both the U.S. stock and bond markets have rallied. Consequently, most observers believe the fallout from the conflict will be limited for the U.S. provided it does not escalate throughout the Middle East.One of the principal differences is that the U.S. economy is energy independent today, whereas the U.S. had become increasingly reliant on imported oil during the 1970s. The problem then was exacerbated by price controls on crude oil that were adopted in 1971 to combat inflation, but which contributed to declines in domestic oil production. When faced with fuel shortages and price hikes in 1973-74, stopgap measures were adopted to conserve energy including having gas stations ration supplies and homeowners use less electricity.   The path to restoring U.S. energy self-sufficiency occurred over several decades. In 1975, Congress established fuel economy standards for new passenger cars to double the average fuel efficiency of new fleets by 1985. Thereafter, President Carter subsequently eliminated price controls on domestic crude oil in 1979. However, it was not until 2019 that the U.S. became a net energy exporter owing to increased production of shale oil, increased energy efficiency in the transport sector and a ramp-up in liquid natural gas and oil export projects.  Energy self-sufficiency does not mean the U.S. is completely immune from oil supply shocks. But their impact has lessened over time. During the two U.S. conflicts with Iraq, for example, crude oil prices roughly doubled, but the Federal Reserve refrained from tightening monetary policy because inflation was under control. More recently, Russia’s invasion of Ukraine caused the price of West Texas Intermediate crude oil to surge by 50 percent initially to more than $120 per barrel. However, oil prices plummeted thereafter until Saudi Arabia and Russia agreed to cut back production to stabilize prices.  Crude traders do not expect a massive price surge now, as there is no immediate threat to supply. Rather, the principal uncertainty is whether the conflict between Hamas and Israel will spread to other parts of the Middle East such as Iran, which could be complicit in assisting Hamas. Thomas Friedman conjectures that Hamas’s motive in attacking Israel may have been to prevent the normalization of relations between Saudi Arabia, Iran’s main rival, and Israel. Such a deal would benefit the moderate West Palestinian Authority by providing it with a huge infusion of cash from Saudi Arabia along with curbs on Israeli settlements in the West Bank and other advances to preserve a two-state solution. One concern is that a retaliatory strike by Israel against Iran would inflame concerns about the Strait of Hormuz, which Iran has previously threatened to shutter. To deter this possibility, President Biden left no doubt where the U.S. stands when he stated: “The United States has Israel’s back.” Biden pledged more military assistance to Israel and announced that the U.S. was sending an aircraft carrier to the area. A key development that lessens the risk of global supply disruption is that members of OPEC are not threatening to cut back production as they did 50 years ago. The minister of the United Arab Emirates, a key OPEC member, reportedly stated that the conflict would not affect the group’s decision-making: “We do not engage in politics; we govern by supply and demand and we do not consider what each country has done.”

A wider war would disrupt global oil supplies

Phil Rosen Oct 13, 2023, Business Insider, Oil spikes 4% as geopolitical tensions stoke fears of a supply disruption, https://markets.businessinsider.com/news/commodities/oil-prices-today-crude-brent-israel-iran-russia-supply-china-2023-10?_gl=1*1jxc0n9*_ga*NTYwMjIxOTI0LjE2OTcyMTcwOTI.*_ga_E21CV80ZCZ*MTY5NzIxNzA5MS4xLjEuMTY5NzIxNzE2MS42MC4wLjA.

Meanwhile, investors continue to monitor the Israel-Hamas conflict, which could expand to other parts of the region and potentially disrupt oil flows. While Israel itself is not a major crude producer, the Middle East is responsible for over one-third of global seaborne trade. On Friday, Israel said more than 1 million residents of the northern Gaza Strip must evacuate, with a ground attack widely expected to begin later. Economist Nouriel Roubini warned earlier this week that the impact of the Israel-Hamas conflict has yet to be fully priced into markets. So far, he said, investors are accounting for only a baseline scenario in which Israel occupies Gaza but that the conflict would remain otherwise contained. Still, Roubini sees a potential for further downside risk if Iran and Lebanon get involved. Advertisement 0 seconds of 15 secondsVolume 0% “If that were to be the case, of course the supply of oil from the Gulf gets disrupted and you get a spike in oil prices and then the economic impact would be huge,” the economist said.

Large risk of a wider war

Thibault Spirlet Oct 13, 2023, The Insider, Israel invading Gaza could escalate the war into a larger regional conflict, experts say, https://www.businessinsider.com/israels-invasion-of-gaza-could-escalate-into-regional-conflict-experts-2023-10

Israel’s invasion of Gaza could escalate the war into a full-blown regional conflict, military analysts said. “The trigger in our minds for all the dominoes to fall is for Israel to cross into Gaza,” Dale Buckner, retired US Army colonel and CEO of the global security firm Global Guardian, told Insider. “If Israel makes the decision that it’s going to attack Gaza in some shape or form — whether that’s from sea, air, or ground — then this escalates materially because now you have all the different cells that Iran backs throughout the region,” he said. Over the weekend, Hamas launched a surprise terrorist attack on Israel. Israel said 1,300 people were killed and more than 100 people were taken hostage. Advertisement On Sunday, Israel declared a state of war and a day later announced a “complete siege” of Gaza. Israel’s retaliations have left more than 1,500 people dead as of Friday, the Palestinian health ministry said. Late on Thursday, Israel said that civilians living in northern Gaza needed to evacuate the area within 24 hours, suggesting that a large-scale attack could be imminent. Buckner pointed to signs of escalations across Israel’s borders that could tilt a possible Israeli-Hamas war into a regional conflict. In the north, the Iranian-backed Lebanese militant group Hezbollah launched dozens of rockets and shells against Israeli positions on Sunday in a contested region along the border with the Israeli-occupied Golan Heights. Advertisement While in the south, Israeli forces have bombed the crossings of food, medicine, and fuel deliveries from Egypt into Gaza. Having served as a US Army veteran for 24 years, Buckner said he knows “these escalations have a way of taking life on their own, and that’s the risk here.” Israel’s incursion into Gaza could create a “domino effect” that triggers all its neighbors in the region to join the conflict, Buckner said. Hussein Ibish, a senior fellow at the Washington-based Arab Gulf States Institute, made a similar point to The Washington Post. Advertisement “This could easily get out of control,” he told the newspaper, adding: “Everything is in place for a cascading series of events that will culminate in Israel attacking Iran.” Meanwhile, Amichai Magen, a visiting fellow in Israel studies at Stanford University’s Freeman Spogli Institute for International Studies, told ABC7 News that Iran could easily react. “If Iran concludes that it is about to lose its southern proxy in Gaza, that Israel will eliminate or severely degrade Hamas in Gaza, it may very well open a second front against Israel in the north using Hezbollah and various proxies that it has built in Syria, even in Iraq and Yemen with Houthis,” he said. “This is potentially a very dangerous multi-front conflict that we may be facing over the next few days and weeks,” Magen added. Advertisement

50% risk of World War

Theron Mohamed Oct 13, 2023, Business Insider, There’s now a 50% chance of world war as the Israel-Hamas conflict threatens to spread, hedge fund legend Ray Dalio says, https://www.businessinsider.com/ray-dalio-israel-hamas-world-war-middle-east-politics-linkedin-2023-10

The Israel-Hamas clash threatens to spark other bloody battles and it’s now a coin toss whether a world war including the US and China breaks out, Ray Dalio has said. “In my opinion, this war has a high risk of leading to several other conflicts of different types in a number of places, and it is likely to have harmful effects that will extend beyond those in Israel and Gaza,” the veteran investor who’s also a financial historian wrote in a LinkedIn post on Thursday titled “Another Step Toward International War.” “Primarily for those reasons, it appears to me that the odds of transitioning from the contained conflicts to a more uncontained hot world war that includes the major powers have risen from 35% to about 50% over the last two years,” he said. Dalio is the billionaire founder of Bridgewater Associates — the world’s largest hedge fund — and the author of “Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail.” Advertisement He’s been sounding the alarm on rising tensions within and between countries for several years. In his latest missive, he said the US and China were “at the brink” of a so-called hot war — and the spread of the Israel-Hamas conflict could lead to the nations crossing the line into military combat. Dalio, who’s an expert in global power shifts and historical cycles, said that the Israel-Hamas and Russia-Ukraine conflicts were likely to be “brutal until the end” when one side emerges as the clear victor and that these types of fights were “more likely to spread than subside.” “If they spread to other countries, most importantly the major countries, there will be a much more horrific hot world war,” he said. “It seems to me that the Israel-Hamas war is another classic, unfortunate step toward a more violent and encompassing international war.” Dalio framed the two wars as part of a greater power struggle that would define the new world order. The current tensions between the US and China were still manageable and wouldn’t necessarily boil over into full-blown war, he said. But he added that if direct combat broke out and deaths started to mount, that would pave the way for a shift from “contained pre-hot-war conflicts to a brutal World War III.” Bridgewater’s retired boss, who now serves as an official mentor to the hedge fund’s three co-chief investors, urged world leaders to exercise restraint, allies of the warring countries to resist being drawn into physical fighting, and governments to work together to prevent escalation. Dalio said his “pipe dream” would be for everyone to recognize the horror of a world war and come together to avoid one. “My more attainable stretch goal would be for the US and China to jointly broker peace in Ukraine,” he said.

Iran-US war causes oil price spikes that kill the economy


Priddy, 10-12, 23, Greg Priddy is a Senior Fellow for the Middle East at the Center for the National Interest, U.S. Should Prevent Escalation of Israel-Hamas War, https://nationalinterest.org/feature/us-should-prevent-escalation-israel-hamas-war-206920

If the United States were to undertake military action against Iran, it would be the first time in many decades that the enemy would possess the capability to inflict widespread damage and casualties outside its own immediate vicinity. Iran’s ballistic missiles, cruise missiles, and suicide drones have been mass-produced and have demonstrated their accuracy in episodes like the September 2019 attacks on Saudi oil facilities in Abqaiq and Khurais, the October 2018 missile strike against Islamic State elements in northeast Syria, and the retaliation against U.S. forces in Iraq in January 2020 after the U.S. drone strike which killed Revolutionary Guard Gen. Qassem Soleimani. When we engaged Saddam Hussein’s Iraq in 1991 and 2003 and Muammar Gaddafi’s Libya in 2011, neither had systems with anywhere near this sort of accuracy and effectiveness.  One consequence that we should expect to see in a U.S.-Iran clash is a disruption of oil supplies. U.S. aircraft would definitely need to use bases in the United Arab Emirates and Qatar, with U.S. forces deployed in Saudi Arabia and Kuwait also likely being involved in supporting the mission. Iran would likely respond with missile and drone strikes against critical oil infrastructure, which pose a greater threat to oil than trying to interdict shipping in the Strait of Hormuz, given the long lead-time to repair some of these facilities. Iran chose to target only a subset of the critical units of Abqaiq in 2019, allowing Saudi Aramco to route around the damage at a facility that runs well below nameplate capacity. The 2019 strike demonstrated their capabilities, designed to stay below the threshold at which President Trump would involve U.S. forces. This time, it would likely aim to inflict maximum damage with a larger target set. Defenses have improved marginally, but a large enough drone swarm and ballistic missiles could cause a significant oil disruption. With 2024 a critical presidential election year, a broad range of knock-on domestic impacts on the United States could result from a lasting oil price spike and a subsequent recession.  This also would put Gulf Arab partners in an awkward position vis a vis their own populations. The Hamas attack against Israel has, regrettably, had broad and deep resonance in the Arab world as judged by the reaction on social media. It is very much akin to the 2006 war between Hezbollah and Israel, where Arab public reactions transcended Sunni-Shia divisions even as sectarian conflict raged in Iraq. Gulf Arab states would not be able to halt a U.S. decision to strike Iran and would inevitably be placed in the position of having to side with Washington even as they faced Iranian reprisals and resulting economic dislocations.

The war will not spread, Iran deterred

James S. Robbins is a senior fellow for National Security Affairs at the American Foreign Policy Council and Dean of Academics at the Institute of World Politics, 10-12, 23, What Was Hamas Thinking?, https://nationalinterest.org/feature/what-was-hamas-thinking-206923

Maybe Hamas thinks they can attract international sympathy by hyping Palestinian civilian casualties. Hamas uses civilians as human shields precisely for this purpose—it benefits from high body counts. But Israel seeks to minimize needless deaths, and the world knows it. Plus, Hamas has already provided a stark contrast. There will be no scenes of Israeli troops dragging elderly people from their cars for summary execution, no IDF soldiers loading Palestinian women into trucks to rape and murder them, and no children being held hostage with the threat of death hanging over them. There is no moral relativism here. The Israelis are the good guys. Hamas is a clear and present evil. Hamas felt that it could disrupt Arab-Israeli rapprochement. Ismail Haniyeh explicitly denounced the normalization efforts. But the rulers in Egypt, Saudi Arabia, the UAE, and other countries in the region have no use for the kind of radicalism Hamas preaches and the chaos it creates. Hamas is not their idea of the face of the Arab future. They also recognize that Hamas is a creature of Shiite Iran, an enduring adversary of the Sunni Arab states. So, Israel needs to convince Arab states to actively participate in the Gaza reconstruction effort once Hamas is eliminated. Let them build Gaza into a model Palestinian society, bolstered by tourism and trade instead of UN handouts and Iranian weapons. Maybe Hamas thinks it can spark a wider war, with Hezbollah attacking in the north, perhaps a West Bank uprising, maybe even Iran intervening directly. This is all possible, but given the international reaction, it is unlikely. Any terror group that joins the fighting will suffer the same consequences as Hamas. If Iran seeks to intervene, the war could escalate to the point where it draws in the United States, NATO, or other proponents of the rules-based international order. So, whatever Hamas intended by Operation Al-Aqsa Flood, it has failed. Unlike its previous encounters with Israel, the terror organization may have unleashed an unlimited war that would culminate in the group’s utter destruction. There will be no international pressure on Israel to limit its objectives until Hamas is driven from Gaza. And even then, Hamas leaders will be hunted relentlessly for years to come. Maybe the people of Gaza will discover how much better life can be when freed from living under the thumb of violent extremist overlords and given a chance to develop their society in peace and freedom. Maybe then “land for peace” can become a reality.

It could easily spill-over

CNN, 10-13, 23, Israel-Hamas war rages as Palestinian death toll in Gaza rises from attacks, https://www.cnn.com/middleeast/live-news/israel-news-hamas-war-10-13-23

Jordan is “extremely concerned” about the conflict in Israel spreading, the country’s foreign minister said. Ayman Safadi said Jordan is working around the clock on de-escalating and preventing the conflict from spilling over into the West Bank and Lebanon, which he described as Jordan’s top priorities. “If the level of violence and war we see there spreads into those territories, then the whole region is going to be engulfed. Popular reaction is going to be more aggressive,” Safadi told CNN on Friday. Concerns about a wider regional conflict: Hamas’ operation was carried out in a sophisticated and coordinated manner and would have taken a significant amount of planning. Speculation has been rife that the group may have received assistance from abroad, which, if proven, could raise the specter of a wider regional war. Israel may also face the threat of new fronts opening in the war. Of its immediate neighbors, it is only at peace with Jordan and Egypt, and is officially in a state of war with Lebanon and Syria. Israel has said it is ready in case there are attacks from those two countries. The Lebanese militant group Hezbollah, which is backed by Iran, has praised Hamas’ attack and said it is in contact with Palestinian militant groups “at home and abroad,” its Al Manar channel said.

US military trying to deter an attack on Iran

Matt Seyler, August 7, 2023, Thousands of Marines and sailors deploy to Middle East to deter Iran from seizing ships, https://abcnews.go.com/International/thousands-marines-sailors-deploy-middle-east-deter-iran/story?id=102072031

More than 3,000 Marines and sailors arrived in the Middle East on Sunday in a deployment meant to deter Iran from seizing and harassing merchant ships near the Strait of Hormuz, according to U.S. Naval Forces Central Command. They came aboard the dock landing ship USS Carter Hall and amphibious assault ship USS Bataan, which together can carry dozens of aircraft, including Ospreys and Harrier jets, plus amphibious landing craft and tactical vehicles. These forces belong to the Bataan Amphibious Ready Group and 26th Marine Expeditionary Unit (MEU). The North Carolina-based MEU “is capable of conducting amphibious missions, crisis response and limited contingency operations to include enabling the introduction of follow-on forces and designated special operations,” according to a release from Naval Forces Central Command. Defense Secretary Lloyd Austin ordered the move last month “in response to recent attempts by Iran to seize commercial ships” in the Middle East, according to U.S. Central Command.