Energy Tomorrow Blog
Posted September 25, 2014
Supply matters. According to U.S. Energy Information Administration (EIA) chief Adam Sieminski, crude oil could cost at least $150 a barrel today because of supply disruptions in the Middle East and North Africa – if not for rising U.S. crude production.
Sieminski told the North Dakota Petroleum Council’s annual meeting that crude from the Bakken, Permian and Eagle Ford shale plays and others around the country has spiked in the past decade to more than 4 million barrels per day – enough to make up for outages in crude production elsewhere. Sieminski:
“If we did not have the growth in North Dakota, in the Eagle Ford and the Permian, oil could be $150 (per barrel). There is a long list of countries with petroleum outages that add up to about 3 million barrels per day.”
So, let’s rephrase things a bit: Clearly, U.S. production, adding to global supply, matters. A lot.
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 10, 2014
A new report from Brookings’ Energy Security Initiative adds more scholarly weight to the analytical case for lifting America’s decades-old ban on crude oil exports. Echoing earlier studies by IHS and ICF International, the Brookings research finds that allowing the export of domestic crude would stimulate more oil production here at home, provide broad economic benefits and strengthen U.S. energy security. Brookings:
… we believe that the U.S. should allow the market to determine where crude oil will go and move immediately to lift the ban on all crude oil exports. … After 40 years of perceived oil scarcity, the United States is in a position to help maximize its own energy and economic security by applying the same principles to free trade in energy that it applies to other goods. By lifting the ban on crude oil exports, the United States also will help mitigate oil price volatility while alleviating the negative impacts of future global oil supply disruptions.
Posted September 4, 2014
New Jersey Gov. Chris Christie is making headlines this week with a speech from Mexico calling for stronger economic ties between the two countries and actions to sustain what he called the “North American energy renaissance” – including lifting the decades-old ban on exporting U.S. crude oil. Christie:
“For all of North America, the energy revolution has improved our strategic and competitive position. But the revolution remains in its infancy. And whether North America realizes the full potential of its energy opportunity will be the result of more than just luck and natural bounty, it will also be driven by the policy choices and investments we must make. … The 1970s-era ban on crude exports creates a price anomaly which holds U.S. crude oil at a discounted price, which ultimately hurts upstream production and limits the energy boom.”
Christie’s remarks parallel what others are saying about ending the domestic crude oil export ban.
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 13, 2014
Ever since the Keystone XL pipeline first started clearing environmental reviews by the U.S. State Department, opponents basically have been left with arguing that State missed one thing or another in an effort to drag out the federal review. Of course, the credibility of the tactic has suffered evaporation with each successful State review, now five in all.
That’s the context for the latest bid to undercut State’s thorough analysis – an analysis that claims that State underestimated Keystone XL’s emissions impact by failing to consider that the pipeline would increase supply and drive down global prices leading to increased demand (and emissions).
The economic foundation is suspect, as Alberta University Professor Andrew Leach writes in an article for MacLean’s, here.
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 June 30, 2014
Washington Post Editorial: Quietly but wisely, the Commerce Department has decided to allow the first exports of U.S. crude oil since Congress imposed a ban on such sales (except to Canada) in the 1970s. To be sure, the agency’s ruling amounts to redefining crude in a way that applies only to a form of ultralight oil that U.S. refineries are ill-equipped to process. The executive branch couldn’t do much more than that to expand crude exports without congressional permission. Still, Commerce’s move is a step in the right direction because resuming oil sales abroad could help the U.S. economy reap the full fruits of the shale revolution that has propelled this country back into the top ranks of global oil and gas production.
The origins of the ban lie in the long-gone political and economic issues of the Nixon era. Specifically, the United States banned oil exports in response to the declining domestic production and Middle East supply shocks of that time, which, together with the then-existing system of U.S. price controls, made it seem rational to keep U.S.-produced oil at home rather than let it flow to the highest bidder on the world market. The world has changed dramatically since then; with U.S. production booming, this country is in a position to move the world market. Yet some still defend the export ban on the grounds that it holds down the price of crude to U.S. refineries and, by extension, the price of gasoline at U.S. pumps.
A new report by IHS Global explains why that thinking is outmoded.
Posted June 16, 2014
FT.com – Despite jitters over Iraq, the price of oil is at its most stable since the early 1970s, as a huge increase in US oil production offsets massive disruptions to supply from places such as Libya, according to BP.
Christof Rühl, group chief economist, said the world had seen a cumulative 3m barrels a day of supply disruption since the start of the 2011 Arab uprising but that had been “cancelled out” by a similar extra amount of US production.
“There has been an almost perfect match between outages in north Africa and elsewhere and US production growth,” he said. The equilibrium had created an “eerie quiet” in global oil markets.
Posted June 6, 2014
UPI: WASHINGTON --Strong growth in onshore U.S. oil and gas production means fewer problems from hurricanes, the analytical arm of the U.S. Energy Department said Wednesday.
Sunday marked the start of the Atlantic hurricane season. As of Wednesday, there are no cyclones reported in the Atlantic Ocean, though Tropical Storm Boris is headed north from the Yucatan Peninsula of Mexico at a rate of 5 miles per hour.
Though offshore oil and gas installations may be shut in by any major storm in the Atlantic, EIA said inland production could make up for any shortfall.