Energy Tomorrow Blog
Posted July 29, 2015
The current crude oil export debate basically is about global competition – and whether the United States will stop sanctioning itself and let an American commodity trade freely on the global market.
An irony – we’ll call it the “Iran Irony” – underscores the anti-competitive nature of our outdated ban on oil exports and the strategic shortsightedness of maintaining it.
The “Iran Irony” is this: While the U.S. advances a nuclear deal that would let Iran reemerge as a major oil supplier on the global market – to Iran’s economic and competitive gain – the United States denies itself similar benefits by banning its own crude exports. This is hurting America’s global competitiveness, diminishing the potential positive impacts of America’s rise as an energy superpower.
Posted July 14, 2015
A potential nuclear deal with Iran that would permit the Iranians to resume exporting crude oil to global markets – short-term and long-term – underscores questions about our own oil export policies. Here are two: What are the implications of Iranian crude oil exports for U.S. production? And: When will our government lift de facto sanctions against the export of U.S. oil?
Bloomberg reports that Iran’s oil minister says the country can increase exports by 500,000 barrels a day as soon as economic sanctions are lifted, then an additional 500,000 barrels a day in the following six months. Richard Nephew of Columbia University’s Center on Global Energy Policy is less optimistic about that kind of ramp-up. The U.S. Energy Information Administration (EIA) has said Iran could reach 700,000 barrels per day by the end of 2016.
The point is, if there’s a nuclear deal that lifts economic sanctions against Iran, Iranian oil will be getting to market.
Posted July 10, 2015
The compelling case for lifting America’s decades-old ban on exporting domestic crude oil is multi-faceted.
There's the economic case, with NERA Economic Consulting estimated that lifting the ban could add $200 billion to $1.8 trillion to the U.S. economy between now and 2039. There's the case for consumers, with a variety of studies indicating that lifting the ban could lower prices at the fuel pump from 1.7 cents per gallon to up to 12 cents per gallon. There's the foreign policy case and the way home-grown crude oil could affect global relationships, helping allies and potentially neutralizing the ability of adversaries to use energy as a diplomatic weapon. Then there's the energy case. Domestic production, spurred by greater access to global crude markets, could grow by 2.1 million barrels per day to 4.3 million barrels per day over levels under the status quo, according to NERA.
Certainly, each of these was argued again at a pair of Capitol Hill hearings, one by the House Agriculture Committee (video) and another by the Energy and Commerce Committee’s Energy and Power Subcommittee (video).
Posted July 7, 2015
Roll Call (Reps. Joe L. Barton and Henry Cuellar) – The advantages of lifting the ban on crude oil exports are not just theoretical talking points discussed in the halls of Congress, but rather supported by a large and growing body of research by government agencies, academic institutions and think tanks across the political spectrum. The latest is a study released by the Harvard Business School and the Boston Consulting Group. It highlights the obvious benefits lifting the ban will have on American families and businesses, our economy and global allies.
The study discusses the changing U.S. energy landscape and the opportunities made possible by America’s new energy abundance. The fear of a crippling dependence on foreign oil that existed in the 1970s, when the export ban was put in place, is no longer applicable today. In fact, the U.S. is now the world’s top petroleum producer largely due to our recent ability to produce oil and natural gas from shale formations. The world has changed drastically in the past 40 years and it is time for our policies to accurately reflect the current conditions in which we now live. We must embrace the United States’ new leading role on the world energy stage and recognize the value it would create in our everyday lives.
Posted June 23, 2015
Fuelfix.com – President Barack Obama “understands” the argument for exporting U.S. crude, a leading Democratic advocate said Monday.
“He understands,” Sen. Heidi Heitkamp, D-N.D., said on CNBC’s “Squawk Box.” “He is in that category of understanding. I think his State Department understands how significant this could be to soft power. I think his Energy Department understands that this is bad economics and bad for the resource.”
Heitkamp stressed that she couldn’t speak for the administration, but added that “at the highest level, they understand this policy is not a good policy.”
Still, when it comes to the politically treacherous subject of widely exporting U.S. oil — which has been under heavy restrictions since the 1970s — “everybody wants to get together and . . . make a bipartisan decision to do this,” Heitkamp added.
Posted June 22, 2015
Wall Street Journal (Hamm) -- Amid news of a pending nuclear deal with Iran, some OPEC countries have struck agreements with refineries in Asia to avoid losing market share when Iranian oil comes back on the market. If U.S. policy will allow Iran to export oil, shouldn’t it allow America to do the same? Clearly, our allies would rather get their oil from America than Iran if given the choice. But without the ability to export, the U.S. is not even in the game.
Congress must lift the ban on U.S. crude oil exports. The ban is a terrible relic of the Nixon era that harms the American economy. As Sen. Lisa Murkowski (R., Alaska) has pointed out, restrictions on oil trade effectively amount to domestic sanctions. Combined with a mismatch in refining capacity, the ban on oil exports is creating a significant discount for U.S. light oil at no benefit to anyone except refiners and their foreign ownership. It has cost U.S. states, producers and royalty owners $125 billion in lost revenue in four years, according to industry estimates.
Foreign producers are using their heavy oil—and the U.S. ban on exports—as a weapon against America. Over the past three decades countries such as Venezuela, Mexico, Saudi Arabia and Canada have overtaken U.S. refining capacity to run their heavy crude in American refineries and capture a large portion of the U.S. market. Without firing a shot, they have disadvantaged American oil and interests.
Posted June 19, 2015
Energy & Environment Daily – Supporters of ending the ban on crude oil exports are mounting a full-court press to win over wary lawmakers, while keeping a close eye on global markets and the calendar.
Export backers in recent months have cited both national security and economic arguments as they look to line up the votes to repeal the decades-old ban. Earlier this week at a speech at the U.S. Energy Information Administration annual conference, Continental Resources Inc. founder Harold Hamm warned that maintaining the ban would cause U.S. production to fall by 1 million barrels a day (Greenwire, June 16).
EIA's own data from earlier this month pegged U.S. oil production at 9.6 million barrels per day in May, but predicted that amount to "generally decline" until early 2016 before picking up again.
However, EIA's latest forecast also noted the highest average monthly price of 2015 for the global oil benchmark -- Brent crude, which rose $5 a barrel in May. At the same time, U.S. average gasoline prices rose to $2.72 last month, a 25-cent increase over April and the highest of the year so far.
Posted June 18, 2015
SNL – Accusing OPEC of manipulating crude oil prices, the founder, chairman and CEO of Bakken Shale pioneer Continental Resources Inc. on June 16 detailed arguments for lifting the U.S. ban on oil exports, saying exports would rejuvenate a flat-lining oil industry while lowering domestic gasoline prices.
Speaking to a Washington, D.C.-centric crowd at the U.S. Energy Information Administration's 2015 Energy Conference in Washington, Harold Hamm said the combination of North Dakota's Bakken Shale and Texas' Eagle Ford Shale and "new" Permian shales — "Cowboystan" — provides the nation with more than enough production and reserves to permit exporting light, sweet crude oil.
"Horizontal drilling has transformed" oil and gas production in the U.S. to where the country "reaches energy independence" by 2020 and "we can get to the point where we can produce 20 million barrels per day," more than double what the U.S. has produced in recent months, according to the EIA.
"Only in America" could Cowboystan happen, Hamm said, because of the "three Rs: rigs, rednecks and royalties."
Posted June 11, 2015
NPR – There's a serious problem in the American economy: Big corporations are doing well, but real household income for average Americans has been falling over the past decade — down 9 percent, according to census data.
"That's not good for America," says Harvard economist Michael Porter. "That's not good for America's standard of living. That's not good for our ultimate vitality as a nation."
That's why Porter's excited about the deep reserves of natural gas and oil that have been made accessible by hydraulic fracturing technology, or fracking — a boon he examines in detail in a new report.
"It is a game changer," Porter says. "We have estimated that already, this is generating a substantial part of our GDP in America. It's at least as big as the state of Ohio. We've added a whole new major state, top-10 state, to our economy."
Posted June 10, 2015
BloombergBusiness – The U.S. has taken Russia’s crown as the biggest oil and natural-gas producer in a demonstration of the seismic shifts in the world energy landscape emanating from America’s shale fields.
U.S. oil production (green line in chart, left) rose to a record last year, gaining 1.6 million barrels a day, according to BP Plc’s Statistical Review of World Energy released on Wednesday. Gas output also climbed, putting America ahead of Russia as a producer of the hydrocarbons combined.
The data showing the U.S.’s emergence as the top driller confirms a trend that’s helped the world’s largest economy reduce imports, caused a slump in global energy prices and shifted the country’s foreign policy priorities.
“We are truly witnessing a changing of the guard of global energy suppliers,” BP Chief Economist Spencer Dale said in a presentation. “The implications of the shale revolution for the U.S. are profound.”