“You and me we sweat and slave, but that old man energy just keeps rolling along”. Good news to sing about!
In one of that witches ’ brew that come out of the Congress and are called “compromise”, a bill seems to be working its way through the toils of the legislative process to end the four-decades-old ban on oil exports. In exchange, the Republicans and oil companies have agreed to put more money into the so-called green energy subsidies.
It’s not the best of solutions. But the possibility of shoving the growing gas and oil surpluses in the U.S. – a product of the Shale Revolution – on the world market argues well for the American economy. We hope it makes it.
The ban on exports – proving again when a law gets into place it is hard to dislodge even in the face of revolutionary changing conditions – dates back to the 70s. That’s when our growing imports were hit by the price-fixing Persian Gulf and others’ monopoly, the Organization of Petroleum Exporting Countries [OPEC]. But OPEC, despite recent huffing and puffing, has been dying on the vine, or rather swamped by the world energy glut.
The leading OPEC producers are now pumping violently, even though it is tearing the world energy price to shreds, in order to garner more market share. They obviously see the possibility of the Americans reentering the market, particularly in Western Europe. The Saudis, particularly, see their once catbird seat as the arbiter of world oil pricing dissolving in the American technology which has opened up enormous new possibilities in gas and oil in shale deposits worldwide once beyond the bit of the drills. [Don’t look now but that may also affect how the rest of the world views the Saudis’ sponsorship of reactionary Islamic religio-political movements.]
The U.S. production boom in Texas and the Dakotas and Montana, is cranking out more than one million barrels of crude a day. Current law does permit the export of half a million barrels a day from Alaska to Asian customers and exchanges with Canada. And as the largest consumer in the world, the U.S. even during an economic downturn is burning 19 million barrels a day according to the U.S. Energy Information Administration.
So far, at least, although the Saudis have oil that can be produced at a few cents a barrel, their gushers have not totally crippled the American shale producers. Good old American technological innovation continues to make leaps in shale productivity – and moderate world demand in a period of economic “malaise” – has so far saved a good part of the new industry.
Still, the glut causing low prices is keeping a lot of rigs from pumping full blast. Luckily for all concerned, the new crudes are mostly light, not the kind of heavy oil the huge Texas refineries were geared to handle from older U.S. fields and Caribbean imports but are welcomed by foreign refineries. The lifting of the export ban would produce an immediate spurt in jobs for the oil transportation systems and suppliers of their equipment needed for the new export capacity. The Aspen Institute says that means adding 630,000 new jobs and an additional $165 billion annually to the Gross Domestic Product for the next six years.
Hopefully, this deal is not going to get sidetracked as the Congress winds down for the holidays.
Not everyone is happy about the new developments, of course. Some investors in oil stocks are holding their heads. But we have always argued that cheap energy is the soul of American economic progress and development and that hasn’t changed, even if some of the players have. [Electricity producers are turning from coal to gas, or combinations of natural gas and coal gas – switches that probably are still in their infancy and too early to judge. But the gains in trimming emissions are already obvious.]
So bring on the oil – and gas [liquidifed natural gas] – exports!