President Richard M. Nixon’s call for U.S. energy independence after the Saudi oil embargo in 1974 seemed like an idle pipe dream at the time. With domestic U.S. demand increasingly dependent on foreign sources, especially that from then-belligerent world-leading oil producer Saudi Arabia, America’s conventional oil production staggered to a minimum output of 3 million oil barrels a day; little more than a third of the domestic amount needed during that period.

Although the U.S. downward attrition was eventually offset by increased exports from the Saudis, Venezuela and other major OPEC producers, this did not prevent the price per oil barrel from temporarily shooting up to $145 per barrel just before the 2008 outbreak of the multi-year great financial recession.

In fact, the low of $26 per barrel of light oil in 2010 would never again reach $60 per barrel in the post-recession recovery period. But by early 2016, it wallowed in the mid-40s per barrel and remained that way until the end of that year approached. This resulted in President Obama’s lifting of the 42-year-old U.S. export embargo in order to gain approval of the fiscal 2016-17 budget just before he left office in January 2017.

But in a simultaneous collusion of circumstances, the U.S. oil industry now has been able to make hydraulic fracturing (fracking) more cost-effective. This offset global price recovery sought by OPEC’s member nations, even after setting back their annual production quotas.

While the new life given to U.S. oil production and natural gas availability by the fracking revolution had put the U.S. near the top of production of fossil fuels (oil, gas and coal) as a whole, it had imprisoned the global WTI oil price structure to the mid-to-high $40s range. Surprisingly, it also has created a new world market for U.S. light oil, especially in Southeast Asia, as opposed to the much heavier Brent crude found in most of the rest of the world.

This is leading the U.S. into the realm of top world exporters, while also reaching the lofty objective in shipments of liquid natural gas.

This anticipates a U.S.-based energy development bonanza, suppressed for the past 16 years. It led to the cancellation of an even greater suppression call of fossil fuels, called for by Hillary Clinton.

Such unexpected positive developments easily could position the U.S. at the global top, as Asia’s falling oil reserves open the door to America’s WTI light oil. China and India represent the world’s fastest-growing demand providers, but they are possessed of only the most “rudimentary” oil refineries — a bonanza for the U.S.

The benefit of Venezuelan oil sanctions

As once the richest country in South America based on its significant oil reserves, Venezuela now faces U.S. sanctions. Venezuela has been heavily dependent on exports of 800,000 barrels per day to the U.S., of both traditional oil production, as well as that of oil sands available from Lake Maracaibo, near its capital in Caracas.

These U.S. imports rank a close third behind Canada and Saudi Arabia in total U.S. import volume. But Venezuela exports provide the most voluminous import business for U.S. Gulf Coast sophisticated oil refineries. These also thrive on the heavy oil imports from the Mideast and Canada. Most of the U.S. WTI light oil production requires much less refining attention than must be provided for the heavy oil imported from most of the world’s Brent crude producers. The huge Texas-based Phillips 66 refinery leads all 13 large U.S. Gulf Coast refineries, providing almost 20% of the 250 million barrels utilized by the refineries comprising America’s Gulf Coast Group.

An additional Venezuelan financial income in this massive refining system is its ownership of Citgo, the second-largest Gulf Coast refinery importer, wholly-owned by Venezuela’s state oil company (PDVSA). With a second Venezuelan-owned refinery located in Corpus Christi, Texas, this brings Venezuela’s share in U.S. crude imports to close to 30% of the imported U.S. refinery total.

The pending American sanction entanglement between the U.S. refinery capacity and Venezuela’s cash position shortage could impose negative consequences on the disintegrating Venezuelan economy, as well as that country’s very existence as a viable national entity.

While the loss of Venezuela’s business also will downgrade the huge share that Venezuelan crude oil has provided in the past to America’s overall group of Gulf Coast refineries, this will have less effect on the latter. That void would likely be filled by competing U.S. refineries and a stepped-up availability from other Brent crude production sources, primarily from Canada, Saudi Arabia and even other Mideast suppliers. All are seeking the benefits of America’s 144 refineries, providing them with entry into the U.S., and its end-use oil derivative markets.

It is likely the squeeze of U.S. sanctions, combined with the significant loss of 45 million barrels of refined oil availability to U.S. markets, would have little economic effect on the U.S. refining interests as a whole, but the big hole left will lessen any chances to improve Venezuela’s degenerating domestic tranquility and its impact on South America as a whole.

Keystone pipeline irrelevancy

During the two four-year terms of the Obama administration, nothing focused more on the former president’s anti-fossil fuel energy antipathy than his constant delay and eventual rebuttal of this direct flow of Canadian oil-sands-derived energy directly to America’s world-class refineries located around the Gulf of Mexico.

These sophisticated refineries were uniquely capable of turning Canada’s oil sands into “clean crude.” This was due to the complexity of America’s top-notch refinery system of 144 units, capable of refining the heavy Brent crude oil found in the Middle East, the Norwegian/Scottish fields and subsequent oil sands found in both the Venezuela’s Lake Maracaibo, as well as the more recently discovered “heavy oil,” found primarily in the Athabasca region of Canada’s Alberta province.

However, with the growing availability of ethanol derived from corn products and mandated during the George W. Bush eight-year presidency, America’s gasoline converters were forced to use 10% of this “artifice” for every gallon of gasoline produced.

But with the breakthrough of hydraulic fracturing (fracking) and the 50% plunge in oil prices worldwide, compounded by the higher cost of oil sands, this has become unnecessary. But the agricultural beneficiaries of corn conversion, which had become an important supplement to the U.S. Midwest’s struggling agricultural sector, was loathe to give up this valuable corn end-use factor.

A similar fate befell the oil sands sector, no longer necessary in the new age of fracking. Therefore, exploration in the North Polar regions, once a focal point of nationalist controversy, has been put in indefinite abeyance.

In the meantime, the record U.S. oil production is benefitting from the record increase of oil shipments to both Europe and Southeast Asia. This is setting records of a million-plus barrels of West Texas Intermediate each day.

But even more of an energy benefit is the natural gas conversion to liquids, which is now in the process of being converted and reaching global distribution from six seaports along the Gulf of Mexico coastline. Natural gas, especially, is experiencing its greatest growth ever. Major corporations are bringing home U.S. chemical industry production facilities due to the bottom-low prices of America’s natural gas production, making them competitive with foreign world production.