With prices low and production high, businesses are pushing with new vigor in efforts to lift the ban America has over exporting crude petroleum. Most recently, ConocoPhillips Chairman and CEO Ryan Lance spoke at the U.S. Chamber of Commerce Tuesday on the matter.
According to a news release from ConocoPhillips, Lance delivered his speech, “American Energy: Keeping the Momentum Going,” Tuesday with the message that the current ban is outdated and economically constraining the nation. Lance cited the nation’s oil and natural gas industry for supporting 9.8 million domestic jobs and the recent energy renaissance for providing 40 percent of the growth in the nation’s gross domestic product over the past two years.
In addition, Lance explained lifting the ban would help the eventual manufacture capacity of U.S. refineries who are already overwhelmed with production. By enabling a surplus of U.S. light crude that exceeds U.S. refiners’ processing capacity to sell on the world market, this would create additional demand for light oil from the nation’s growing shale producing fields. Lance also noted that the whole process would help sustain the energy-driven economic stimulation and job creation that has contributed to the rebounding U.S. economy.
Despite the perception rig counts may give you, growth in U.S. light oil production in 2014 was a million barrels a day, with further growth anticipated this year. Recently, the U.S. Energy Information Agency reported that, “projected 2015 oil prices remain high enough to support some development drilling activity in the Bakken, Eagle Ford, Niobrara, and Permian basin, albeit at lower levels than previously forecast.”
According to ConocoPhillips, there are currently seasonal surpluses of light oil, and these are expected to extend year-round by 2017. The resulting price discounts on domestic light oil sold to refiners, combined with weak world oil prices, threatens to force proposed development projects below their break-even points. Lance feels that unless exports are allowed, the pace of drilling would slow, causing domestic job losses and damaging the economy.
Numerous studies, including a report issued earlier this year by Columbia University’s Center on Global Energy Policy, have noted the many benefits that could come from lifting the export ban. Disbanding the restrictions could increase U.S. crude production up to 1.2 million barrels per day on average between now and 2025, the study found Additional analysis estimated that domestic gasoline prices could drop as much as 12 cents per gallon as a result of the policy change.
Pushing congress to lift
On the same day Lance was addressing the Chamber of Commerce, Pioneer Natural Resources CEO Scott Sheffield was expected to tell a House panel about the negative impacts of the export ban during a hearing to examine changes in global energy markets.
A recent fuel fix article stated that Sheffield views that low oil prices, which prompted energy companies to shut off rigs and cut jobs, hit domestic producers harder than their international counterparts because of the U.S. crude export ban.
In a prepared testimony filed with the House Energy and Power Subcommittee, Sheffield said, “Producers of domestic oil are especially disadvantaged compared to foreign producers, because they cannot receive global prices.”
Currently, it doesn’t seem like too many members of Congress are making noise about this issue either way. The one exception, however, is Rep. Ed Whitfield (R-KY) who held the hearing Tuesday.
There is no question that the America’s oil and natural gas boom has been very good news for America, but that is not to say that it doesn’t bring new concerns – we have simply traded one set of challenges for another,” said Whitfield. “Unfortunately, our energy policy is largely based on old laws rooted in assumptions of scarcity, and may no longer be up to the task of addressing these new challenges and taking full advantage of emerging opportunities.”
In somewhat a surprising statement, according to an Energy and Commerce Committee press release, Charles Drevna, President of the American Fuel & Petrochemical Manufacturers (AFPM) stated that the refining industry is not opposed to lifting the ban. But, the AFPM believes a more holistic energy strategy is needed to ensure all barriers to free and functioning markets are addressed.
“AFPM does not oppose lifting the crude oil export ban,” Drevna explained. “But urges Congress to base decisions on the facts while readdressing a suite of anti-free market policies contemporaneously. Enacting this type of comprehensive energy policy will avoid the mistakes of the past, which have bred a balkanized and conflicting set of priorities and policies that ultimately disadvantage U.S. consumers,” said Drevna.
Committee Chairman Fred Upton (R-MI) stated that the committee recognizes that the export of oil and other liquid hydrocarbons presents different issues than natural gas. And they are undertaking a thorough review of the export ban. Upton added that “America’s energy abundance has greatly changed energy markets and presents a number of new opportunities, and we will carefully consider our approach to all of them.”