Low gasoline prices mean that energy policy has taken a back seat to other issues on the 2016 presidential campaign trail, said economist Bernard Weinstein.
Gasoline prices have tumbled to below $2 per gallon in the Dallas area, where Weinstein lives, and now average $2.42 per gallon in Billings, according to gasbuddy.com. A steep decline in oil prices that started last year has resulted in less pain at the pump, but also thousands of layoffs in the oil patch.
“Politicians don’t talk about energy policy unless gas is $4 per gallon,” said Weinstein, who was in Billings to address the Montana Independent Automobile Dealers Association. Cheap gas prices likely won’t last forever, and many Americans won’t start paying attention until gas prices rebound at near $3 per gallon, he said.
Weinstein is the associate director of the Maguire Energy Institute at Southern Methodist University, and he frequently speaks about energy issues to business groups.
In a presentation titled “Sheiks vs. Shale,” Weinstein documented how OPEC producers have been fighting to maintain their share of the world oil market. OPEC has lost its clout in the wake of a boom in oil and gas production from United States shale producers. The Bakken formation in North Dakota and Montana and the Eagle Ford formation in Texas are two of the best known shale plays.
The Bakken rig count has fallen below 100, down from a high of 250 rigs in the field during 2012. Despite that, newer technology has helped producers wring more barrels from each Bakken well, Weinstein said.
In his presentation, Weinstein said today’s low gas prices have helped boost sales of light trucks and SUVs. U.S. auto sales are on pace to eclipse 18 million units this year.
But Weinstein also warned that a slowdown in the Bakken, plus new federal environmental regulations designed to curb greenhouse gas emissions, could put a dent in Montana’s energy-intensive economy.
“This can’t be good for Montana, with the oil going down and coal going down and the construction associated with it, it’s going to be pretty tough, and that has implications for auto sales,” Weinstein said. “(Auto dealers) have done pretty well in the past couple of years.”
Last week, the House of Representatives voted to end a ban on the export on U.S. crude oil, a restriction that dates to the 1970s energy crisis. President Barack Obama has already pledged to veto the measure, but Weinstein believes his decision is politically motivated.
“It makes absolutely no economic sense,” he said of the export ban. “It’s all about Obama kowtowing to the environmentalists.”
Some question whether exporting U.S. oil makes sense when the nation continues to import much of its oil.
Prices of oil and gas in the United States is going to be determined by the world market, regardless of whether we export it or not,” Weinstein said. “Whether we export is not going to affect the price. However, it would be good for the industry. If it makes economic and logistical sense to export oil, we should export.”
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This article was written by Tom Howard from Billings Gazette, Mont. and was legally licensed through the NewsCred publisher network.