Energy Blog

Energy Blog

US Chamber of Commerce Blog

Sean Hackbarth House Energy and Commerce Committee Chairman Fred Upton (R-Mich.).House Energy and Commerce Committee Chairman Fred Upton (R-Mich.). Photo credit: Andrew Harrer/Bloomberg.

Mark Perry at the American Enterprise Institute tweeted that U.S. oil output hit a 42-year old high in May.

CHART: New EIA data today show US oil output surged to a 42+ year high in May of 9.5MM bpd https://t.co/1OGLVf3nbZ pic.twitter.com/wr6qsM0Psk

— Mark J. Perry (@Mark_J_Perry) June 3, 2015

Today, the U.S. is producing about as much oil as it was when it imposed an export ban on crude oil 40 years ago.

As the energy boom persists, the groundswell for lifting the ban continues to grow inside and outside Washington, D.C.

According to a recent Reuters story, Bank of America Merrill Lynch analysts found "a surprising amount of support to remove the ban across members of the House and Senate."

While Senators Lisa Murkowski (R-Alaska) and Heidi Heitkamp (D-N.D.) and Representatives Joe Barton (R-Tex.) and Mike McCaul (R-Tex.) have made waves in their outspoken support for lifting the ban, most members of Congress have kept quiet. They worry they'd be blamed for gasoline price increases after the ban was lifted.

(Oddly Washington politicians don't worry about prices going up from exported grain, beef, cars, aircraft, medical equipment, or even petroleum products that have no export ban.)

The fact is every study conducted has found that U.S. crude exports will decrease gasoline prices. 

Rep. Fred Upton (R-Mich.) has made it easier to have a serious discussion about the ban. While not endorsing it, the chairman of the House Energy and Commerce Committee, is open "revising the ban on crude oil exports."

Because exporting U.S. oil could help create jobs inside the country it's time for Congress to consider lifting a decades-old ban on those foreign sales, a key House Republican said Tuesday.

"The energy sector has been the nation's most significant jobs creator in recent years, but with the drop in oil prices as many as 100,000 energy industry positions have been lost," noted Rep. Fred Upton, R-Mich., the chairman of the House Energy and Commerce Committee. "The case for creating more jobs by expanding the market for American oil is a key reason why oil exports should be on this committee's agenda this year."

Away from Washington, there's bipartisan political support for lifting the ban. A letter to President Obama from 10 Republican governors touts the job and economic security gains. Colorado's Democratic Gov. John Hickenlooper told Commerce Secretary Penny Pritzker in a letter that lifting the ban will insure that "domestic producers continue to invest and that energy consumers benefit."

Along with these governors, energy business leaders have been educating the public and allaying fears.

Encana President and CEO Doug Suttles explained to an audience at the U.S. Chamber how lifting the ban would lower gasoline prices:

The price at the pump is tied to the global price of crude, because refined products are traded globally. Adding U.S. crude oil to the global oil market would help to increase global supply, putting downward pressure on global prices while simultaneously increasing the price the United States receives for its crude.

Several independent economic studies, including one from the U.S. Government Accountability Office, agree that repealing the export ban will put downward pressure on gasoline prices. Global consultancy ICF International suggests this may save an average of up to $5.8 billion per year between 2015 and 2035. Meaning Americans pay less at the pump while state and federal tax revenues go up.

[Watch our video interview with Suttles.]

And according to ConocoPhillips' CEO Ryan Lance, Americans could see "savings on gasoline of $18 billion annually" by lifting the ban.

[Watch our video interview with Lance.]

It's no longer the 1970s. The U.S. is producing more oil than it has in decades and importing less. We need to change our mindset from one of energy scarcity to one of energy abundance and adjust our policies to match it. 

Sean Hackbarth A footprint from a worker's boot is left at a sand mine in Maiden Rock, Wisconsin. A footprint from a worker's boot is left at a sand mine in Maiden Rock, Wisconsin. Photo credit: Ariana Lindquist/Bloomberg.

The shale boom isn't just about what's happening in places like North Dakota, Texas, and Pennsylvania. The Midwest, especially Wisconsin, is seeing the benefits because it's a great source of sand for hydraulic fracturing:

Wisconsin was the leading producer of frac sand in 2014, accounting for nearly half of the nation's production of the white sand coveted by the hydraulic fracturing industry, new statistics released this week show.

The United States Geological Survey's preliminary estimates for 2014 show Wisconsin's production at 24 million metric tons, compared with 8 million for Illinois, 8 million for Texas and 5 million for Minnesota.

Wisconsin, which has been dubbed the Saudi Arabia of sand, has seen a significant expansion of sand mines and sand processors in recent years as the oil and gas industry has expanded production of oil and gas through horizontal drilling techniques such as "fracking."

In a report, the USGS estimated that frac sand sales totaled 31 metric tons in 2012.

The sand is in high demand, because its grains are well able "to prop open underground shale formations fissured by horizontal drilling and hydraulic fracturing," National Geographic reports.

Frac sand is being mined, loaded onto rail cars, and shipped to the Bakken, Eagle Ford, Marcellus, and other shale plays.

usgs_fracsand_map.jpg  U.S. Geological Survey.

Nearly half (47%) of all frac sand mined went to the Eagle Ford and Permian Shales in Texas. The Marcellus and Utica shales in the Northeast received 22% of the sand.

The skyrocketing growth in frac sand mining mirrors the growth of oil and natural gas production from hydraulic fracturing.

usgs_fransand_growth_chart.jpg  U.S. Geological Survey.

Jobs supported by the frac sand mining industry are just part of the 524,000 jobs supported by shale energy development.

In 2012, the Federal Reserve Bank of Minneapolis noted how sand mining has been a boon to rural areas in Wisconsin:

Unemployment in Barron County, Wis., topped 11 percent at one point during the recession. But since 2010, sand mining companies have invested hundreds of millions of dollars in the predominantly rural county--making its economic development director bullish on the future.

"Frac sand is the biggest and best thing that's happened in our lifetime in Barron County," Bob Missling said. "I see frac sand becoming one of the county's biggest sources of [business] revenue, moving forward."

Even with softening oil prices over the last year, high demand for frac sand is expected to continue because more sand is being used for each well. "The USGS report says a typical fracking well used 900 tons of sand seven years ago but that had grown to 4,100 to 5,000 tons last year," reports the Milwaukee Journal Sentinel. In addition, companies are considering refracturing existing wells to increase output.

Thomas J. Donohue Thomas J. Donohue, U.S. Chamber of Commerce

After years of robust growth in the energy industry, things have slowed a bit due to lower oil prices and production. There's every reason to believe, however, that America continues to have a great opportunity to be a global leader in energy if we adjust our national energy policies for this new era of energy abundance.

America's energy revolution is already responsible for most of our net job creation and economic growth since the recession. After years of empty predictions about "peak oil," the United States is now the world's largest oil and natural gas producer. While prices may fluctuate, worldwide energy demand is only going in one direction--up. Global demand will increase 50% by 2040. With growing reserves of shale oil and gas across our nation, that presents a great opportunity for us.

There are three things we can do to ensure that energy continues to drive the U.S. economy and job creation for decades to come. First, we must remove barriers and obstacles to production. We should open more federal lands to safe and responsible development. We must beat back burdensome regulations that target entire energy sectors and seek to cripple production of our resources. We must modernize a broken permitting system that prevents job-creating energy projects from getting off the ground.

Second, we should lift the outdated ban on oil exports. The ban was enacted in 1975 when our nation was facing an oil embargo and long lines at the gas pump. Today's reality is much different. Studies have shown that lifting the ban on oil exports will decrease the price of gasoline by as much as $5.8 billion per year, create an additional 394,000 jobs, as well as add $1.3 trillion to the federal Treasury by 2030 and $239 per year in disposable income to American households. American oil entering the global marketplace will not only lower prices, but it will help ensure that energy cannot be used as a tool by unfriendly nations.

Third, we need to protect our energy infrastructure from physical disruptions and cyberattacks. According to the Department of Homeland Security, attacks against energy-related systems made up more than 40% of all reported incidents in fiscal year 2012. To combat these threats, information exchanges between government intelligence agencies and the private sector are absolutely critical.

When we think about ways to create jobs, boost revenues, and improve our national security, updating our energy policy should be at the top of our list. Smart reforms will keep America the world leader in energy production for decades to come.