WASHINGTON, DC - The subcommittee on Energy and Power, chaired by Rep. Ed Whitfield (R-KY), today held a hearing to examine changes in global energy markets. When it comes to energy markets, the transformation over the last decade has been dramatic and for the better. America is producing more while using and importing less, resulting in more jobs and lower prices at the pump. But, while the overall effects of our energy abundance are positive, they do present some new challenges under our current existing energy policy.
“There is no question that the America’s oil and natural gas boom has been very good news for America, but that is not to say that it doesn’t bring new concerns - we have simply traded one set of challenges for another," said Whitfield. “Unfortunately, our energy policy is largely based on old laws rooted in assumptions of scarcity, and may no longer be up to the task of addressing these new challenges and taking full advantage of emerging opportunities."
Adam Sieminski, Energy Information Administration Administrator described the United States’ impressive contribution to global energy supply, explaining, “The United States was the main contributor to global supply growth, adding 1.6 million b/d including 1.2 million b/d of increased crude oil supply." EIA expects this growth to continue in the year ahead which will help keep oil prices low and benefit consumers.
John Kingston, President at McGraw Hill Financial Global Institute, talked about the United States’ competitive energy advantage and potential, stating, “When talking about U.S. competitiveness on energy, it’s important not to forget that natural gas is what gives the U.S. an enormous edge. … Most important to note today is the duration of this revolution: six years and counting. In terms of economic transformation, six years is just a warm-up. The changes in the U.S. resulting from these added flows have just begun." In addition to the benefits of America’s energy revolution, Kingston noted the shortcomings of the recent fall in prices, noting, “The oil and gas extraction industry showed job losses of 2,000 for the month of January. This was the highest monthly loss since the recession. Moreover, regions that are heavily reliant on the energy sector could see a greater negative impact on employment and their surrounding economies."
Amy Myers Jaffe, Executive Director of Energy and Sustainability at the University of California, Davis, spoke to the geopolitical influence of America’s new abundance, calling for the United States “to lead from the front when it comes to energy geopolitics." She explained, “A formalized national security assessment needs to be a more transparent metric for decision making on energy infrastructure and trade policy, similar to the manner in which environmental assessments are performed. Our international diplomacy should be addressing energy pro-actively."
(From left to right: Adam Sieminski, Scott Sheffield, Charles Drevna, John Kingston, Amy Jaffe, Brad Markell, and Graeme Burnett)
The recent changes in energy markets have also raised questions about wither certain federal policies are still relevant and beneficial, particularly the ban on crude exports. Members questioned the panel about the impacts of lifting the ban.
Scott D. Sheffield, Chairman and CEO at Pioneer Natural Resources Company, fears the ban could unintentionally harm U.S. producers and consumers while benefiting OPEC countries. “If U.S. producers are forced to downsize further due to a protracted downturn caused by the export ban, it could take the industry many years to restore production growth. Loss of critical mass in the U.S. oil and gas sector equates to loss of energy security for the United States," he said.
Charles Drevna, President of the American Fuel & Petrochemical Manufacturers, expressed that while AFPM is not opposed to lifting the ban, the refining industry believes a more holistic energy strategy is needed to ensure all barriers to free and functioning markets are addressed. “AFPM does not oppose lifting the crude oil export ban, but urges Congress to base decisions on the facts while readdressing a suite of anti-free market policies contemporaneously. Enacting this type of comprehensive energy policy will avoid the mistakes of the past, which have bred a balkanized and conflicting set of priorities and policies that ultimately disadvantage U.S. consumers," said Drevna.
Chairman Upton concluded, “We recognize that the export of oil and other liquid hydrocarbons presents different issues than natural gas. That is why we again are undertaking a thorough review and will consider all perspectives -including producers, refiners, and consumers. America’s energy abundance has greatly changed energy markets and presents a number of new opportunities, and we will carefully consider our approach to all of them."
