Kyle Isakower's remarks at press conference call on the market impact of hydraulic fracturing
Opening statement as prepared for delivery
Press Conference on the Market Impact of Hydraulic Fracturing
Kyle Isakower, API Vice President for Regulatory and Economic Policy
Thursday, October 30, 2014
Opening statement, as prepared for delivery:
In the last few months, motorists have watched with growing optimism as U.S. gasoline prices fell to levels not seen in nearly four years. In fact, AAA reported on Monday that the majority of U.S. filling stations were now posting prices below $3 per gallon. This would normally seem impossible given the turmoil we’ve experienced overseas.
Today, economists are still debating where the markets might go from here. But for the average consumer, there’s no question that America’s energy revolution has provided a welcome source of savings. And for U.S. retailers and other businesses, that savings translates into lower costs and more potential customers with disposable income.
Citigroup analysts have described it as a $1.1 trillion global stimulus – at no cost to taxpayers. Lower crude prices are also providing a check on the influence of foreign suppliers, like OPEC and Russia, which relies on oil and natural gas revenues for over half its federal budget.
Of course, economic growth raises demand for energy, which means that prices will find equilibrium, but the trend toward greater domestic production is a clear bright spot for the U.S. economy.
The U.S. oil and natural gas industry now supports more than 9.8 million jobs. Energy is revitalizing the manufacturing sector and promoting greater security for the United States and our allies.
And, today, we are releasing a new study by ICF International, which calculates the impact of horizontal drilling and hydraulic fracturing technologies on crude markets and prices at the pump. By comparing historical price and production data against a scenario without advanced drilling, it paints a clear picture of where we would be without the technology-driven energy revolution.
According to ICF’s analysis, without horizontal drilling and hydraulic fracturing, international crude oil prices would have averaged $122 to $150 per barrel in 2013 – an increase of $12 to $40 per barrel.
The corresponding discount on gasoline and other refined products was estimated to be 29 cents to 94 cents per gallon.
In total, this decline in prices saved U.S. consumers as much as $248 billion in 2013 and as much as $624 billion over the 2008 to 2013 period.
For the first time in generations, surging domestic production is driving our energy security and providing a crucial buffer against disruptions in Europe, Africa, and the Middle East.
The U.S. Energy Information Administration (EIA) has reported that new American production is “the main factor counterbalancing the supply disruptions on the global oil market.”
And, over the last five years, nearly every barrel of new U.S. production can be attributed to the use of horizontal drilling and hydraulic fracturing.
According to ICF’s analysis, U.S. oil production from wells utilizing horizontal drilling and hydraulic fracturing totaled 4.78 million barrels per day in 2013, accounting for 48 percent of all U.S. production – up from 11 percent in 2008.
Not coincidentally, U.S. production, according to the EIA, rose from 5 million barrels per day in 2008 to 7.4 million in 2013 – also an increase of 48 percent.
Today, U.S. production is over 8.5 million barrels per day, 70 percent higher than the 2008 average, which shows that our energy revolution is just getting started.
EIA Chief Adam Sieminski recently estimated that 2014 had the potential to be another expensive year for U.S. consumers, with global supply outages adding up to about 3 million barrels per day. Without new American production, he speculated that prices would be about $150 per barrel – consistent with ICF estimates.
The last time crude prices approached those levels was just around Independence Day in 2008.
But, while most observers now credit U.S. production with reshaping global markets, it’s important for policymakers to recognize that the American energy revolution was not a lucky accident. It was the result of decades of American innovation aimed at unlocking our resources here at home. And it happened primarily on state and private land.
To build that momentum and strengthen our position as an energy superpower, it’s critical that policymakers turn aside duplicative regulations on hydraulic fracturing and ensure that U.S. consumers can benefit from energy production on federal lands that remain off-limits.
We also must work quickly to solidify our role as an energy superpower by modernizing 70s-era trade restrictions that prevent U.S. oil from reaching global markets. Study after study has shown that lifting restrictions on free trade will drive more jobs, a stronger economy, and put downward pressure on fuel prices.
With that, I’d like to thank you for your time, and I’ll open things up to questions.