Energy Tomorrow Blog
Posted October 14, 2014
A new study by the Aspen Institute joins a series of analyses concluding that one benefit from exporting U.S. crude oil would be lower gasoline prices here at home. Aspen’s projected reduction of between 3 and 9 cents per gallon parallels findings in previous major studies by ICF International (3.8 cents per gallon), IHS (8 cents) and Brookings/NERA (7 to 12 cents) that exports would lower pump prices.
Aspen and the other studies project other benefits from exporting crude oil, including broad job creation, economic growth and increased domestic energy production. Yet the solidifying consensus that consumers also would benefit is critically important as the public policy debate on oil exports continues.
Posted October 8, 2014
New York Times: HOUSTON — The Singapore-flagged tanker BW Zambesi set sail with little fanfare from the port of Galveston, Tex., on July 30, loaded with crude oil destined for South Korea. But though it left inauspiciously, the ship’s launch was another critical turning point in what has been a half-decade of tectonic change for the American oil industry.
The 400,000 barrels the tanker carried represented the first unrestricted export of American oil to a country outside of North America in nearly four decades. The Obama administration insisted there was no change in energy trade policy, perhaps concerned about the reaction from environmentalists and liberal members of Congress with midterm elections coming. But many energy experts viewed the launch as the curtain raiser for the United States’ inevitable emergence as a major world oil exporter, an improbable return to a status that helped make the country a great power in the first half of the 20th century.
“The export shipment symbolizes a new era in U.S. energy and U.S. energy relations with the rest of the world,” said Daniel Yergin, the energy historian. “Economically, it means that money that was flowing out of the United States into sovereign wealth funds and treasuries around the world will now stay in the U.S. and be invested in the U.S., creating jobs. It doesn’t change everything, but it certainly provides a new dimension to U.S. influence in the world.”
Posted October 6, 2014
We’ve posted a number of times on the merits of U.S. energy exports, because whether the subject is exporting crude oil or natural gas, there are compelling economic and energy reasons to lift restrictions on America’s ability to be a major player in global markets. While those restrictions remain, America and Americans lose.
A number of studies have said that energy exports will benefit our economy and stimulate more domestic production – here, here and here on liquefied natural gas (LNG) and here and here on crude oil. A new report from Columbia University’s Center for Global Energy Policy added that LNG exports could help strengthen the United States’ foreign policy hand.
Thanks to abundant oil and natural gas reserves, advanced hydraulic fracturing and horizontal drilling and investments by a robust industry sector, the U.S. is the world’s No. 1 producer of natural gas and is about to become No. 1 in oil output (subscription required). Yet, because of self-imposed and outdated (in the case of the crude oil) export restrictions, the U.S. isn’t harnessing its energy potential as it could and should.
Posted October 3, 2014
Here’s the president, lauding the lift America’s domestic energy revolution has provided the nation’s economy in a speech this week in Illinois:
“The first cornerstone is new investments in the energy and technologies that make America a magnet for good, middle-class jobs. So right off the bat, as soon as I came into office, we upped our investments in American energy to reduce our dependence on foreign oil and strengthen our own energy security. And today, the number-one oil and gas producer in the world is no longer Russia or Saudi Arabia. It’s America. For the first time in nearly two decades, we now produce more oil than we buy from other countries. We’re advancing so fast in this area that two years ago I set a goal to cut our oil imports by half by – in half by 2020, and we’ve actually – we will meet that goal this year, six years ahead of schedule.”
It’s good to hear the president talking about the benefits to America of resurgent oil and natural gas production here at home. He’s right: The United States is the world’s No. 1 producer of natural gas and is poised to be No. 1 in oil production. He’s also right that this domestic output has cut imports significantly, putting America on a path to zero net imports in the foreseeable future – a good bench mark for something everyone wants: genuine U.S. energy security.
Now let’s talk plainly.
These energy developments and their benefits have occurred without much help from this White House. They’ve happened even as the president’s actions and those of his administration have fallen well short of his “all-of-the-above” rhetoric on energy.
Posted October 3, 2014
The Hill Congress Blog (Dan Eberhart): America’s boom in shale oil and gas has given us a new tool to counter aggressive nations without firing a shot. That tool is energy abundance. With increased production and new techniques of extracting energy from shale, it’s time to break free from outdated shackles on U.S. crude oil exports.
In the 1970s, we were hogtied by energy scarcity. The U.S. suffered a devastating oil embargo during the mid-1970s courtesy of the Organization of Arab Petroleum Exporting Countries (OAPEC), and at the end of the six-month embargo, oil prices had quadrupled from $3 a barrel to nearly $12. Our country’s economy was crippled, and we faced the prospect of “stagflation” and wage and price controls.
By December 1975, President Gerald Ford signed the Energy Policy and Conservation Act (EPCA), a ban on most U.S. energy exports that remains in place today. At the time, export bans made sense; they preserved the resources we did have.
That was then, this is now.
Today, the ban is hurting our economy and global competitiveness. Lifting the crude export ban would tilt global markets, benefit the American consumer and bolster the US economy, restoring the US to the status of energy superpower.
Posted September 19, 2014
A couple of recent polls indicate many Americans are concerned that lifting the 1970s ban on crude oil exports could increase prices at the pump. A couple of thoughts.
First, it’s likely these opinions stem from an idea that restricting domestic crude oil output to the boundaries of the United States will favorably impact domestic pump prices. Yet, because crude oil is traded globally, the world market sets the cost of crude, which then is the chief factor in prices at the pump.
Second, the strong weight of new scholarship and analysis say that allowing exports of domestic crude will lower pump prices in this country – while also boosting economic growth, employment and wages and improving our balance of trade.
Posted September 15, 2014
(Wall Street Journal): Skeptics of the U.S. energy boom say it can't last much longer because it requires drilling an ever-increasing number of wells.
But the boom already has lasted longer than anyone would have imagined just a decade ago and has more room to run. That's because oil and natural-gas wells have become more productive—an unrecognized but potent trend that should keep the fuels flowing.
Posted September 9, 2014
"The more the US exports crude oil, the greater decline in gasoline prices," the study from The Brookings Institution's Energy Security Initiative claimed. "As counterintuitive as it may seem, lifting the ban actually lowers gasoline prices by increasing the total amount of crude supply, albeit by only a modest amount."
Brookings' finding are nearly identical to those of a May study from energy consultancy IHS which concluded that free trade of crude would cause US gasoline prices to fall 8-12 cents/gal due to the close link between gasoline and world oil prices.
Like IHS, the Brookings study claimed the impact of crude exports on gasoline prices dulls over time, falling from a 9-12 cent/gal drop in 2015 to 0-10 cents/gal by 2025.
Posted September 2, 2014
Reuters reports that Washington is hearing from more allies who want the U.S. to lift its ban on crude oil exports, with South Korea and Mexico joining the European Union in pressing the case for U.S. oil. Reuters:
South Korean President Park Geun-hye told a visiting U.S. delegation of lawmakers on the House of Representatives energy committee on Aug. 11 that tapping into the gusher of ultra-light, sweet crude emerging from places like Texas and North Dakota was a priority, the lawmakers said. One of South Korea's leading refiners has opened discussions with the government in Seoul over how to encourage Washington to open the taps, three sources in South Korea with direct knowledge of the matter told Reuters. Mexico is also eagerly awaiting word from the U.S. Department of Commerce on possible shipments and the EU wants U.S. oil and natural gas exports covered by a proposed trade agreement with Washington, the Transatlantic Trade and Investment Partnership.
Posted August 8, 2014
The U.S. Commerce Department’s newest trade report released this week shows increased exports of crude oil and petroleum products were a major factor in shrinking the trade deficit in June to $41.5 billion, down from $44.7 billion in May.
That’s great news. Energy exports are helping build America’s economic strength globally while creating jobs and opportunity here at home. America is more secure as a result of our energy revolution that is bringing opportunities to engage world energy markets and harness U.S. energy for good. Allowing more U.S. oil and natural gas exports is the logical course to support and expand America’s global presence.