By Jim Roth, Director and Chair of the Firm’s Clean Energy Practice Group. This column was originally published in The Journal Record on December 5, 2016.

Jim Roth is a Director and Chair of the firm’s Clean Energy Practice.

Thanks, OPEC?

As an American consumer, more often than not OPEC has truly been a four-letter word, causing price spikes and negative impacts to our broader economy.

But as you fill up your car for holiday travel, at around $1.60 a gallon for gasoline, many Americans can be thankful for the low energy prices fueling their lives. Global oil prices have been under serious downward pressure for the past two years mostly because Saudi Arabia convinced its OPEC brethren to let market forces set the price and production continued to soar.

As an American energy enthusiast, I know that much of the thanks goes to our own domestic producers, the new technologies to discover and recover new reserves and the historic amounts of oil and gas production their ingenuity has made possible, thereby also providing oversupply to the benefit of American consumers.

But as an Oklahoman, I’m hesitant to give thanks to OPEC for much, especially as their two-plus-year campaign of oversupply was probably intended to hurt American producers, many of them right here in our part of the country. And in many ways it worked, as we’ve witnessed massive job losses, business contractions, some bankruptcies and general carnage in the energy services industries.

What is OPEC and why does it matter? Begun in 1960 in Baghdad, the Organization of Petroleum Exporting Countries is a permanent, inter-governmental organization whose founding members include: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Nine other member countries have joined over time: Qatar, Indonesia, Libya, United Arab Emirates, Algeria, Nigeria, Ecuador, Angola and Gabon and all other members operate under a Declaratory Statement of Petroleum Policy, which essentially expresses an inalienable right of these countries to exercise sovereignty over their natural resources in the interests of their national development.

These stated rights and purposes led to OPEC’s quick growing prominence as early as 1973 with the Arab oil embargo and its steep rise in oil prices. Since that time global and American economic cycles have been impacted by OPEC’s production and policies, sometimes as a symptom, sometimes the cause.

OPEC completed a deal to cut production (first cut since the recession of late 2008) and adopt other policies that have contributed to a sharp rally in oil prices around the world and here at home. The agreement to reduce their collective output by 1.2 million barrels a day to a new ceiling of 32.5 million barrels was a deeper cut than most observers were expecting.

Saudi Arabia will make the biggest cut at 486,000 barrels, but may actually increase its revenue because of the correspondent rise in prices per barrel. The new wrinkle is that non-OPEC countries, namely Russia, have purportedly also agreed to cut their production as well.

As we Americans also know not to trust Russia without verification, OPEC’s agreement also includes the implementation of a “high-level monitoring committee” to make sure parties abide by the terms of the agreement. They would do well to follow the agreement and enjoy an uptick in commodity prices, thereby earning as much or more revenue while leaving more supply in the ground for their later benefit.

Yet, if oil prices continue to rise, most expect American shale producers to ramp up output in hopes of regaining some lost profits (or at least ending losses), thereby creating a market cap of their own with a corresponding effect on oil prices. So the real question in light of OPEC’s announced production cut is whether American producers will avoid too much production coming back in and causing prices to collapse again.

Yes, I’m a consumer who is thankful to OPEC for the low prices these past years, but I’ll be a more thankful American and Oklahoman with American energy producers back in charge of their own destiny.

Jim Roth, a former Oklahoma corporation commissioner, is an attorney with Phillips Murrah P.C. in Oklahoma City, where his practice focuses on clean, green energy for Oklahoma.