Erica Bowman holds press briefing on Gasoline Prices and the Summer Driving Season
As prepared for delivery
Press briefing – Gasoline Prices and the Summer Driving Season
API Chief Economist
Thursday, May 26, 2016
Good afternoon everyone. Thank you for calling in.
As we head into Memorial Day weekend and the traditional start of the summer driving season, motorists have continued to reap the benefits of America’s energy renaissance with relief at the pump.
Although gasoline prices have risen by 20 cents since the beginning of the year, U.S. drivers remain on target to pay the lowest prices for the Memorial Day holiday since 2005, according to AAA.
Thanks to industry innovation and technological advancements, which have been the driving force behind America’s energy revolution, AAA estimates that more than 38 million Americans will take advantage of low gas prices and the long holiday weekend to travel. The benefits for U.S. consumers – as well as manufacturers, the travel and tourism industry and frankly our entire economy – are hard to overstate.
U.S. production is an important factor in lower global crude markets, which has translated into lower energy costs for individual Americans and families. Year-over-year U.S. gasoline prices have declined by almost 50 cents per gallon, due in large part to the decline in the price of crude oil. Brent crude has fallen over $15.40 per barrel when compared to last year at this time. As a result, AAA says lower prices at the pump allowed each licensed U.S. driver to save an average of more than $550 in 2015.
Nationwide, the overall picture this year has generally been one of strong supply and moderately increasing demand for both crude oil and gasoline. Domestic oil production has remained close to all-time highs even though rig counts have been cut in half over the last year, and U.S. refineries have produced record amounts of gasoline.
In order to maintain a robust supply of domestic oil, which historically has put downward pressure on energy costs, we must have a regulatory system in place that doesn’t hinder energy production and threaten our energy supply. We need a modernized energy strategy that matches our new energy reality.
It is essential that the industry be allowed to affordably and predictably explore for and safely develop new resources on private and public lands. That means companies must be able to access and lease acreage, both on and offshore, and obtain permits in a timely fashion.
We also need a concerted effort to improve U.S. energy infrastructure. As the world’s number one oil and natural gas producer, we need safe, reliable pipelines in place to realize our true energy potential by moving product from prolific shale formations across the country to markets at home and abroad and providing consumers and businesses with the affordable energy they need. According to an IHS study, the amount of energy sector infrastructure needed through the middle of the next decade could spur $1.15 trillion in private capital investment.
We’ve transitioned from an era of energy scarcity to an era of energy abundance, and the new challenge is to keep moving forward, not backward.
According to a Wood Mackenzie analysis, pro-development policies could increase oil and natural gas production by 8 MMboed, whereas regulatory constraints could reduce it by 3.4 MMboed by 2035. In addition, pro-development policies could contribute an additional $443 billion/yr to U.S. GDP, whereas regulatory constraints could reduce it by $138 billion/yr.
We must continue to think long term - continue to ensure access to new areas for energy development, and invest in reliable energy infrastructure - to protect U.S. consumers, businesses and national security for generations to come. With the right policies in place, our energy renaissance can endure for decades and help even more families afford to take a vacation on Memorial Day weekend.
With that, I’ll be happy to take your questions.