Energy Tomorrow Blog
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 With increased production and new techniques of extracting energy from shale, it’s time to break free from outdated shackles on U.S. crude oil exports.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.
Posted July 31, 2014
Houston Chronicle (Editorial): Fracking is more effective than bullets when it comes to containing Russian President Vladimir Putin's Soviet-era ambitions.
Empowered by oil funds and a gas pipeline yoke on Europe, Putin has resuscitated a Cold War ethos of nationalism and expansionism. Yet after the invasion of Crimea and Russian militias seizing sections of eastern Ukraine, it seemed as if Europe's red line was located somewhere a few miles east of the Brandenburg Gate. It took the attack on Malaysia Airlines flight MH17 to finally shock Europe back to reality, where Russia stands as a legitimate threat to a peaceful continent.
These aggressive moves have gained Russia few friends, but as Tsar Alexander III once said, Russia's only allies are its army and its navy. For the 21st century, pipelines should be added to that list. And that is where the United States must focus containment efforts.
Our allies are far too reliant on Russian pipelines to truly oppose Putin's aggression - there's a reason why the new technology sanctions against Russia don't apply to natural gas.
Posted July 24, 2014
The New York Times (Steven Rattner): As a young reporter covering energy for The New York Times, I saw firsthand the distortions and inefficiencies caused by the web of regulations that followed the Arab oil embargo of 1973-74, and the resulting surge in gasoline prices.
So I shared in the frisson of excitement last month when the Commerce Department cleared two Texas companies to export an ultralight, processed form of oil called condensate. It seemed like a step toward relaxing the ban on the export of crude oil, the biggest stricture remaining from the ’70s energy crisis.
But then the Obama administration quickly insisted that the Commerce Department, in narrowing the definition of crude oil so that condensate could be exported, was not about to lift the ban more widely. “There has been no change to our policy on crude oil exports,” a White House spokesman said.
That’s unfortunate, because America’s renewed hydrocarbon boom could be even more robust if we eased outdated restrictions on shipping both crude oil and liquefied natural gas overseas.
Posted July 15, 2014
A couple of highlights from the first day of the U.S. Energy Information Administration’s (EIA) annual energy conference, both of which can be used to underscore the need for policies that help sustain and grow America’s energy revolution.
First, International Energy Agency (IEA) Executive Director Maria van der Hoeven suggested exuberance over the U.S. energy boom has risks because energy security is more than just ample supply:
“In periods of abundance we must challenge ourselves with questions. And so I ask you, is your energy security as security as you or I think? … Energy security is about much more than supply. … Although things look bright at first sight, there’s no time for complacency.”
Posted May 29, 2014
Individual states would see significant job creation and economic growth from exporting U.S. crude oil, according to anew state-by-state report by ICF International and EnSys Energy. Specifically, 18 states could realize more than 5,000 new jobs each in 2020 from crude oil exports, with state economies growing by hundreds of millions of dollars each.
Kyle Isakower, API vice president for regulatory and economic policy, talked about the study during a conference call with reporters:
“There is a growing realization that this is a new era for American energy. Scarcity is giving way to abundance, and restrictions on exports only limit our potential as a global energy superpower. Additional exports could prompt higher production, generate savings for consumers, and bring more jobs to America. The economic benefits are well-established, and policymakers are right to reexamine 1970s-era trade restrictions that no longer make sense.”