US consumers rely on 19.63 million barrels of crude oil and 78 trillion British thermal units of natural gas per day for transportation and electrical power generation. A few years ago, those staggering amounts were priced at more than twice today’s level. The lower prices are a result of US fracking and horizontal drilling. Those innovations together allowed us to increase our domestic crude production to 9.3 million barrels per day (Mbpd) and in 2018 production will rise to 9.9 Mbpd. The price of natural gas dropped dramatically. It is the dominant fuel for electric power production. Renewables such as solar and wind turbines improved their position, but $50 per barrel oil and gas priced at $3.04 per million British thermal units will solidify petroleum’s competitive edge for the foreseeable future.

Meanwhile oil’s dive from $110 per barrel caused OPEC and 13 other countries to slash their 52 million barrels per day production by 2%. They hope to maintain crude prices at $50 or better. The steep drop in prices since 2015 has undermined oil-dependent economies burdened by massive social welfare costs. Some Middle Eastern countries need oil to be priced at $95 or better to carry their social welfare burden. Russia, already beset by a weak economy and financial sanctions for its actions in Crimea and Ukraine, lost a $180 billion per year infusion when oil tumbled from $110.

Saudi Arabia is moving ahead with its plan to sell some ownership of Aramco, the Kingdom’s giant petroleum asset which includes 260 billion barrels of oil reserves. Some analysts have speculated that Aramco is worth between $1 trillion and $10 trillion. Saudi Arabia says the planned sale will allow the country to diversify its economy away from dependence on oil. A float that generates anything near a trillion dollars would calm Saudi Arabia’s budgetary jitters, but it is unclear what economically marketable skills Saudis acquired while on the Kingdom’s generous subsidies. Saudi Arabia has been running recent deficits of about 15% of GDP, and cutbacks in subsidies have dissuaded many new ventures from creating the employment diversity needed.

In the midst of this persisting oil market problem, Saudi Arabia, Egypt, United Arab Emirates, Bahrain Yemen and others have severed ties with Qatar due to its growing involvement with Iran and its support for the Muslim Brotherhood. From afar it looks like another Sunni versus Shia spat. The breakup was accelerated when Russia falsified a Qatari state department criticism of Saudi Arabia. The Saudi side has blocked Qatar’s use of their airports and use of ports for shipping Qatar’s massive liquefied natural gas exports. Most of Qatar’s economy relies on trade.

The Saudi’s have not yet escalated into an armed conflict, although there are plenty of sparks in the region that could ignite a large conflict that kills many and further disrupts the oil market. Regular car bombings in Turkey, Iraq, Lebanon, and Syria; the ISIS attack at Khomeini’s memorial in Tehran; the enduring Palestinian-Israeli conflict; and Russia’s aggressive push to secure land bases in the Middle East could each kindle the blaze. Indeed, Iran’s ambition for being the dominant force in the Middle East may nudge it to show military support for Qatar. If that happens, NATO and Russia may feel the need to intervene.

As long as the Middle East avoids armed conflict over the Saudi-Qatar frictions, US consumers should expect low prices for gasoline and electric power. If a military conflict erupts in the Middle East, we will face escalating fuel prices. Unfortunately, we are still half the level of domestic petroleum production that gives us self-sufficiency. Accelerated US fracking and horizontal drilling would boost us closer to self-sufficiency, but setting that much drilling in motion would take considerable time.

Of course, we could avoid most of the pain of shortages if Americans who oppose petroleum drilling and fossil fuel use were to forego use of their cars and electric power, at least until the Middle East settles down.