House to Vote Next Week on Legislation to Increase Flow of North American Energy
Drivers in search of relief from high gas prices are unlikely to catch a break this summer, as prices at the pump are expected to climb even higher due to the growing unrest in Iraq. According to AAA, the current average for gas prices today is $3.67, up 6 cents from this time last year. AAA explains, “Gas prices often decline in June with the national average falling the previous three years at an average of about 20 cents per gallon. The recent turmoil in Iraq is likely to prevent that trend from repeating this year." And NBC reports, “The crisis in Iraq has begun to seep into prices at the pump just as Americans begin the busiest driving season of the year."
But while drivers can expect a bump at the pump, the Iraqi crisis is not expected to send prices soaring. Despite the continued high gas prices over the last four years, the increase in U.S. energy production has contributed to increased stability. Events in the Middle East are still having an effect on U.S. gas prices, but the influx of U.S crude oil on the market is helping to reduce the volatility. In sum, the U.S. oil boom is helping to prevent high prices from being even higher. Patrick DeHaan, an analyst at GasBuddy.com explains, “If this were 2005, we would have seen a 20-to-30 cent jump in gas prices. But it’s lower today because our domestic production is so much higher."
According the EIA, in 2013, “Domestic crude oil production increased 1.0 million bbl/d-rising more than the combined increases in the rest of the world-to reach its highest level in 24 years. This increase marked the largest observed annual increase in U.S. history." The Wall Street Journal reports today, “Much has changed since the so-called Arab Spring to alter the U.S. energy picture. Advanced technologies such as hydraulic fracturing, or fracking, have boosted U.S. crude-oil production by 47% since late 2010." And Jared Meyer, a policy analyst at the Manhattan Institute, wrote recently in Real Clear Energy, “The most important contribution to oil’s price stability has been the substantial increase in U.S. production." The surge in U.S. production has certainly helped rein in prices, but consumers could experience greater relief and more stability if the president would stop blocking energy development on federal lands. A new report shows that all of the increases in domestic oil production have occurred on state and private lands while production on federal lands has decreased.
Meyer also explains how the U.S. could benefit from additional energy supplies from North American neighbors to help supplant Middle East imports, yet infrastructure constraints and political obstacles are holding back this much-needed energy supply from reaching markets. He notes, “A disruption in Iraq’s production would substantially affect its heavy crude oil exports. This is the type of oil found in Canada’s tar sands. Unfortunately, the least costly route to bring this Canadian oil to market, the Keystone XL pipeline, requires approval from the executive branch of the U.S. government. The first application for the Keystone XL pipeline was submitted to the U.S. State Department by TransCanada Corporation 5 years and 9 months ago. In that time, the entire pipeline could have been built three separate times." Meyer concludes, “Recent events in Iraq show the importance of North American oil to world markets. The technological innovations that spurred increased oil production reduce energy price volatility help the world’s economy to grow, and improve America’s international standing. Congress and President Obama should enhance this advantage by approving Keystone XL and speeding up energy permits."
The House has already acted on legislation to approve the Keystone XL pipeline, speed up drilling permits, and increase production on federal lands, and next week the House is expected to vote on a bill to increase the flow of North American energy to markets and consumers. H.R. 3301, the North American Energy Infrastructure Act, authored by Energy and Commerce Committee Chairman Fred Upton (R-MI) and Rep. Gene Green (D-TX), will prevent Keystone- like delays from blocking future U.S. energy infrastructure projects that cross the borders of Canada or Mexico. All of these policies are part of an “all of the above" energy strategy to help make energy more affordable and accessible. By making it easier to produce and distribute North American energy, we can further insulate ourselves from supply disruptions overseas and protect against price spikes.
