U.S. OIL PRICES WAR
The political economy of oil prices in the United States is complicated.
The United States is the world's largest oil consumer and one of its biggest importers.
But it is also a substantial producer with large oil and gas resources.
And its oil is medium-cost, more expensive to produce than the large fields in the Middle East but cheaper than frontier areas like the Arctic.
U.S. politicians tend to be happiest with mid-priced oil: not too expensive to upset motorists but not too cheap to threaten the survival of domestic production and increase dependence on imports.
In the last century, the country has swung between confidence in its self-sufficiency and energy independence to extreme insecurity about its dependence on imported oil.
In recent years, the debate has been characterized by optimism, even complacency, about rising U.S. domestic production and falling reliance on imports, but that could easily change, as it has in the past.
The shale revolution transformed America's sense of its energy security but it occurred thanks to high oil prices and a wave of technical innovation and entrepreneurship.
The shale revolution had almost nothing to do with the political class, though politicians have been quick to claim the credit for an American success story.
But just as rising prices and production banished concerns about import dependence, so falling prices and output could reawaken them if pushed too far.
OIL IMPORTS RISING
U.S. crude oil imports are rising for the first time for more than five years, a sign that Saudi Arabia is winning its war for market share against shale producers.
In the week ending March 18, the United States imported nearly 8.4 million barrels per day of crude oil, according to the U.S. Energy Information Administration.
Weekly crude oil imports were the highest since July 2013.
Faster imports were driven by a surge in oil deliveries from Saudi Arabia, Venezuela and Nigeria which cleared U.S. customs over the seven day period.
Reported imports are subject to considerable week to week variability depending on the timing of tanker arrivals and customs clearance, so it is important not to place too much emphasis on one week's figures.
But there is no mistaking the trend. Crude petroleum imports have been trending higher since the middle of 2015.
Daily crude imports averaged 7.9 million barrels per day over the last 13 weeks, up from 7.1 million bpd in the 13 weeks ending July 3, 2015.
Imports are rising thanks to a combination of strong demand from U.S. oil refineries and falling domestic oil production from shale formations.
Crude is also being imported and put into tank farms. Traders favor storage in the United States because it is a location of net consumption and has favorable banking, legal and physical infrastructure.
Imports will almost certainly increase further over the remainder of the year as refineries ramp up production to meet record gasoline consumption and U.S. crude output continues to decline.
U.S. crude production is forecast to drop from 9.4 million barrels per day in 2015 to 8.7 million bpd in 2016 and 8.2 million bpd in 2017.
Meanwhile U.S. consumption of refined products is predicted to increase by almost 100,000 bpd in 2016 and another 160,000 bpd in 2017.
The growing gap between domestic oil production and product consumption can only be covered by additional imports of crude or refined products.
Recapturing market share from shale and other higher-cost producers has been a key objective for Saudi Arabia and OPEC.
But there could be a political cost if the market share strategy is pushed too far, in the form of a backlash from the United States.
The rise in U.S. domestic oil production and reduction in imports has been hailed by policymakers from both major parties as an important achievement.
Even if the concept of "energy independence" is an illusion in an interconnected oil market and global economy, rising domestic production has contributed to an improved sense of energy security.
But if the price war continues to harm domestic oil producers, it is likely to trigger a political response at some point.
In 1986, U.S. Vice-President George Bush warned Saudi Arabia's King Fahd that oil price stability was a national security issue for the United States.
Bush told the Saudis lower oil prices were a boon to many sectors of the U.S. economy but not to all of them.
"There are two edges to this sort of falling prices, and one of them has got to be the fact that this country - our country, the United States of America - has always felt that a viable domestic oil industry is in the national security interests of the United States," he told his hosts in Riyadh.
Oil prices, as well as security and the control of terrorism and radicalism, have always been central to relations between the United States and Saudi Arabia.
Saudi policymakers have strongly denied that their current price strategy is aimed against shale production.
Saudi Oil Minister Ali al-Naimi told an audience of US producers at CERAWeek in Houston in February:
"Let me say for the record, again, we have not declared war on shale or on production from any given country or company.
"We are doing what every other industry representative in this room is doing. We are responding to challenging market conditions and seeking the best possible outcome in a highly competitive environment.
"Efficient markets will determine where on the cost curve the marginal barrel resides."
But the finer points of that argument may be lost on hard-pressed US shale producers and their political representatives.
ON THE CAMPAIGN TRAIL
So far, energy issues are playing out in a minor way on the presidential and congressional campaigns.
Democrats are more energized by renewable energy issues and much of the party's base is ambivalent or actively hostile to fossil fuel production because of its climate impact.
Hillary Clinton, the front-runner for the Democratic Party's presidential nomination, has promised to impose tougher conditions on fracking.
"By the time we get through all of my conditions, I do not think there will be many places in America where fracking will continue to take place," she said during a debate earlier this month.
Her rival for the party's nomination, Bernie Sanders, has taken an even stricter line, stating simply "I do not support fracking".
Given that fracking now accounts for half of all U.S. oil production these positions may not be practical.
The outgoing Obama administration is also adopting a tougher regulatory stance on all forms of fossil fuel production as part of an effort to make climate progress a legacy issue.
In practice, most U.S. oil and gas is produced in states like Texas, North Dakota, Oklahoma and Alaska that increasingly lean towards the Republican Party, though others like Pennsylvania and Ohio are swing states.
For the moment, the party is convulsed by internal divisions as a result of the rise of businessman Donald Trump and is more focused about maintaining its control over Congress.
In 2012, the oil and gas industry tried and failed to make domestic energy production and energy security an election issue, and it may not be salient this year.
But the political climate is unusually febrile in 2016 and falling oil production could play into it in unexpected ways.
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