US Chamber of Commerce Blog
Harold Hamm has seen first-hand the benefits of America's energy resurgence.
"Growing up as one of 13 children born to sharecroppers in Lexington, Oklahoma, I understand the impact of oil and natural gas on rural communities," Hamm, now chief executive at Continental Resources, an independent oil and gas production company in Oklahoma City, told members of Congress on Wednesday. "In fact, oil has helped me break a cycle of poverty my family had been caught in since the Great Depression."
Hamm has also seen first-hand the consequences of our country's outdated rules banning the export of America's crude oil.
"The federal laws passed in the 1970s artificially controlled the supply, demand and price of U.S. energy and brought about unintended consequences," Hamm explained during a hearing before the House Agriculture Committee, pointing to studies showing that the ban has translated into higher gas prices for Americans, the loss of hundreds of thousands of American jobs, and billions in lost U.S. revenue. "The ban is a terrible relic of the Nixon era that today actually harms the American economy."
Hamm's voice is part of a growing chorus around the country calling for lifting the nation's oil export ban. On the same day, two labor groups, the Laborers' International Union of North America and the International Union of Operating Engineers, added their signatures to a letter with 20 other industry groups supporting a bill eliminating the ban.
In the letter, they wrote: "Opening global markets to U.S. producers will support added domestic production that will create hundreds of thousands of new jobs and contribute tens of billions of GDP dollars in the supply chain within the next few years." The groups later added that the bill would "put downward pressure on domestic fuel prices."
House Agriculture Chairman Mike Conway (R-Texas) agrees, saying in his opening remarks at the hearing that, "While it may have been well-intentioned at the time of enactment, the ban on crude oil exports is an antiquated relic and it is disrupting global energy markets, reducing domestic employment, and slowing economic growth."
Not allowing energy producers to sell oil abroad puts a particularly large strain on America's heartland, Conway added, because "the majority of oil development takes place in rural areas like my district, and when development slows or prices swing wildly, the health of those rural communities suffers."
Calls to remove the ban are growing louder in Congress. A day after the Agriculture Committee hearing, the House Energy and Commerce Committee followed suit with another hearing on the export ban. In his opening comments, Chairman Ed Whitfield (R-Kentucky) reiterated the toll that the ban is taking on the American economy.
"Unfortunately, we have seen the loss of thousands of direct and indirect oil jobs," Whitfield said. "New production is being cut back, not because of a shortage of places to drill, but because of a shortage of customers." He later pointed to an estimate from IHS that lifting the ban would create nearly a million additional jobs in the U.S.
Conversely, maintaining the ban would likely lead to further job losses for oil producers. Hamm, the executive from Oklahoma City, cited recent estimates that his state alone stands to lose 11,000 jobs by the end of the year in the ban continues.
"Why does the United States, a nation historically very supportive of free trade, continue to impose export barriers for domestic crude oil?" Hamm posed to lawmakers on the agriculture committee. "Congress must lift the ban."
In March, The New York Times reported on the Obama administration's strategy of avoiding Congressional approval of any agreement that comes out of climate negotiations in Paris later this year:
To bypass the Senate -- which would have to ratify United States involvement in a foreign treaty -- Secretary of State John Kerry and other diplomatic officials are working closely with their foreign counterparts to ensure that the Paris deal does not legally qualify as a treaty.
What will this entail? According to a 2014 Times story, "[N]egotiators are devising what they call a 'politically binding' deal that would 'name and shame' countries into cutting their emissions." Such an agreement would give an international stamp of approval to EPA's carbon regulations.
With bipartisan opposition to the administration's attacks on reliable power, it's understandable why the White House wants to avoid Congress.
But the administration needs help making the case that it's fine to sidestep Congress over policies that will virtually eliminate affordable and reliable coal power and drastically reengineer the electrical grid.
Along comes the White House's favorite think tank to the rescue.
I've pointed out how the administration relies on the Center for American Progress (CAP) for staffing, policy development, and media strategy. The think tank has delivered again by providing a rationale for why the White House can avoid Congress.
CAP staffers Gwynne Taraska and Ben Bovarnick argue Congressional approval "would be unnecessary" for an international agreement "in which the national goals themselves lack legal force" because of a previous greenhouse gas emissions agreement ratified by the Senate in 1992.
Look for CAP's argument to be echoed by administration officials and by sympathetic commentators in the media.
This gets to something bigger about the administration's efforts to implement its carbon regulations. If we step back, we see the administration's modus operandi is all about sidestepping democratic institutions.
Not only is Congress to not be allowed to approve a Paris climate agreement, but EPA can freely avoid Congressional approval of its carbon regulations. Brian Deese, a former CAP staffer and now President Obama's senior adviser on climate change, told The New York Times, "We can achieve this goal using laws that are already on the books."
Tell that to constitutional law professor Laurence Tribe, who called EPA's plan a "power grab" from Congress, states, and federal courts.Harvard Professor Laurence Tribe on Clean Power Plan: Burning the Constitution
And tell that to Gov. Mike Pence (R-Ind.) and the 14 other states who are suing EPA.
It's an unsettling pattern for an administration touted by President Obama as being "the most transparent administration in history."
Electricity is the lifeblood of the American economy. We can't afford avoiding Congress and the public on such a far-reaching issue.
Read more about EPA's bad carbon regulations -- 4 Reasons Why EPA's Carbon Regulations are All Pain and No Gain.
Is the U.S. the world's top oil producer?
Robert Perkins at Platts asks that question after BP's annual Statistical Review gave the U.S. the number one spot, over Saudi Arabia and Russia.
According to Perkins, if you only include crude oil and condensate--a super-light form of oil--which are most like what we think of as oil, the U.S. falls to number three.
The Energy Information Administration (EIA) is in the "U.S. is Number One" corner. With its broader definition of oil that includes crude oil, natural gas liquids (NGLs), condensates, refinery processing gain, biofuels, and other liquids, the U.S. at number one.eia_top_oil_natgas_countries_2014.png EIA: U.S., Russia, and Saudi Arabia petroleum and natural gas production.Source: Energy Information Administration.
More important than the ranking debate is the fact that we're having this argument at all. It shows how much hydraulic fracturing has changed the energy discussion.
Remember "Peak oil?"
When once it looked like we'd be importing energy forever, we see the federal government slowly (too slowly) allowing increased exports of liquefied natural gas (LNG) and condensate. Now, policymakers and Members of Congress are seriously considering lifting the oil export ban.Natural Gas Liquids as Feedstocks
Going back to Perkins, he lops off most natural gas liquids in calculating U.S. oil production, because "they are not suitable substitutes for crude oil."
They're not, but that doesn't diminish their important role in the U.S. chemical industry.
Petrochemical plants use NGLs components like ethane, propane, butane, and pentane as feedstocks for plastics, fertilizers, and other products, as Mukta Shukla and Ashok Shukla explained in American Laboratory:
Petrochemicals have enabled the creation of novel materials and products in countless manufacturing industries and in other fields such as agriculture, communication, and transportation. For example, in the new Boeing 787 Dreamliner, the latest modern aircraft to be launched, modern synthetic materials comprise about half of its primary structure. In addition, most of the tools on which we depend for daily existence--such as cars, computers, cell phones, children's toys, pesticides, fertilizers, household cleaning products, and pharmaceutical drugs--are derived from petrochemicals.
According to the EIA, U.S. NGL production has increased 66% from 2008 to 2014.
Not only do plants have more basic materials to work with, they also have cheap natural gas to power the plant.
The result has been increased investment from a revitalized domestic chemical industry that's now more globally competitive. The American Chemistry Council estimates that over the next ten years, the shale boom will create 461,800 direct, indirect and payroll-induced new jobs from $46.8 billion in new investment in the plastics industry.U.S. is Tops in Petroleum and Natural Gas Hydrocarbons Production
Let's look at the EIA chart one more time. When natural gas is included, there's no question who is the top petroleum and natural gas hydrocarbons. It's the U.S. by leaps and bounds.
But no matter where the U.S. ranks, no one can deny the incredible impact hydraulic fracturing is having. In both of Perkins' charts, U.S. oil production launches
Here's a chart from BP that isolates U.S. production. It goes up like a July 4th firework, from around 7 million barrels per day (b/d) in 2005 to nearly 12 million in 2014. It's a stunning achievement that no energy expert or Washington, D.C. policymaker could predict.bp_us-oil-production-2014.jpg BP: U.S. oil production, 2014.Source: BP.
Maybe the U.S. isn't the top oil producer. While it would be a nice title to have, not having it doesn't take away the fact that we're witnessing an energy renaissance. Energy abundance is a catalyst for investment, jobs, and growth. That's something to be impressed with.