The latest push for American oil exports happened yesterday day as Texas Railroad Commission Chairman David Porter testified before the U.S. Agriculture Committee today on the importance and urgency of lifting the federal ban.
Many like Porter see lifting the ban as a policy move to spur new American energy production and foster economic growth. In the his speech, the commissioner noted that the Texas Railroad Commission has recently seen a dramatic drop in the number of issued drilling permits of 2,389 in May of 2014 to only 916 as of May this year. Porter argued that the ban is not only outdated, but harming the U.S. economy.
“In Texas, we understand and experience firsthand the link between U.S. oil and natural gas production and the strength of the economy,” Porter said. “The two are inextricably linked. When oil prices recently dropped, we felt the economic impacts at home. We saw thousands of hardworking men and women put out of work and rigs idled. We saw state revenues – used to support schools and infrastructure investments – decline.”
Porter enlightened listeners with a finding from the University of Houston and Rice University, which reported that each drilling rig represents a total of 224 jobs, including those on the rig itself and those across the supply chain and in the broader economy.
“With the loss of 1,072 rigs through June, you can do the math to see just how devastating the recent downturn in development has been for oil and natural gas producing states,” Porter said. “It comes to roughly 240,000 jobs. While repealing the ban will not bring back these jobs overnight, it will certainly get some of these men and women back to work in the near term.”
Other witnesses present at the hearing in support of lifting the ban included North Dakota Petroleum Council Vice President Kari Cutting and Continental Resources CEO Harold Hamm
“We exported until 1975. The infrastructure’s there,” Hamm said. “… It can happen really quickly.”
Another main proponent for lifting the ban, Sen. John Hoeven (R-ND), explained that doing so would be simply a move of practicality. Last week, he stated, “We actually have more light sweet crude than we can refine.” The current domestic refining capacity is heavily weighted in favor of heavy crude oils which are imported in from nearby nations.
“The majority of the new oil being produced from our shale formations is light sweet crude and the U.S. refining capacity is not designed to economically handle the increased volumes of this type of crude,” Porter explained.
Hamm reiterated the commissioner’s point as he stated that two-thirds of American refining capability is built to handle heavier kinds of sour crude rather than the lighter sweet petroleum of the shale revolution.
“Our oil is essentially trapped in the U.S., creating a supply glut that is driving down the price of U.S. oil,” Porter stated. “This represents billions of dollars of lost revenue that could be pumped back into the U.S. economy.”
This glut, Porter highlighted, is responsible for the disparity between West Texas Intermediate (WTI) – the U.S. pricing benchmark for crude – and the international benchmark, Brent.