Posted January 4, 2016
As we write, the United States is once again an exporter of crude oil. Sure, in the past the federal government has allowed limited crude exports. The oil tanker that left the Port of Corpus Christi, Texas, late last week is the bearer of the first freely traded U.S. crude in about four decades – made possible by congressional legislation that President Obama signed to end a 1970s-era ban on exports. It’s a new day indeed.
But wait, there’s more. Cheniere Energy says it has begun liquefying natural gas at its new export terminal in Louisiana, setting the stage for its first LNG export cargo this month.
Both are big-time energy developments for the United States – opportunities created by a domestic energy revolution largely driven by safely harnessing vast shale reserves with advanced hydraulic fracturing and horizontal drilling. The United States, as the world’s leading producer of oil and natural gas, is supplying more of the energy Americans use here at home, lowering imports, and now is poised to become a major player in global energy markets. Phil Flynn, senior market analyst at Price Futures Group, to Bloomberg:
“Who would have thought we would be exporting both oil and LNG in the same month? Fracking has changed the world.”
- Creation of up to 300,000 jobs in 2020, according to an ICF International study.
- An increase of $38.1 billion in U.S. GDP in 2020, ICF says.
- Increased domestic oil production of up to 500,000 barrels per day by 2020.
Similarly, exporting natural gas has the potential to boost domestic production and the economy, according to a new Energy Department report on LNG exports’ macro impacts.
With both oil and LNG exports, though, Americans should think big picture. The U.S. is taking the first steps toward resuming its historical role as a global producer and supplier. The United States’ restored opportunity to be a shaper of global crude markets has a number of potential benefits, at home and with America’s friends overseas – in a world in which oil and natural gas are and will be leading energy sources, as BP’s projection shows:
Domestically, U.S. oil production will have new access to markets with the removal of disincentives to production posed by the export ban. A number of states, such as Colorado, could realize new opportunities through oil exports. The Denver Post reports:
… long-term, as prices recover and more shipping infrastructure gets built, Colorado petroleum producers could benefit. And they would need to sell only a fraction of their output abroad to catapult into the ranks of the state's top exporters. … Gaining a whole new product category with lasting appeal in foreign markets excites trade advocates in the state. “We are starting to gather people from our network to put together an interest group of companies that would like to talk about global energy,” World Trade Center Denver president Karen Gerwitz said.
ClearView Energy’s Kevin Book says the United States’ new exporting posture should be seen over the long haul. Book to E&ETV:
“[F]rom a policy standpoint, it's a significant change. We're adjusting a scarcity-based energy policy for an age of adequacy, recognizing that the world has changed in four decades. For Congress, that's a big step. … This is really a long-term signal. It says to U.S. producers, if you drill the wells, if you make the investment, there will be a market for you again when overall global prices recover.”
As we say, a new day – one that is brighter for the United States.
ABOUT THE AUTHOR
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.