Global Look at Energy

Question 1

Will the Obama administration approve crude oil (not condensate) exports prior to the completion of his tenure?  Support your answer / thought process.

Answer – Question 1

No.  I estimate time to make it through the decision making process will exceed the remainder of his tenure as President, given the scale of this decision.  Through his duration as president, as published in the AOTA Energy Strategy, the president supported the efforts to effectively produce oil and gas contributing to more than 0.2% GDP growth in 2012 and 2013, increase of 133,000 jobs in the oil and natural gas extraction sector 2010-2013, and a 5.4 to 2.8% of GDP drop in trade deficit.  I expect continued support to the efforts that are already in place, but unfortunately I do not expect a decision to be made on the export of crude simply because the data that has recently come to light within the last 2 years is still to be examined and weight of impact needs to be measured prior to execution.  The administration will support and stimulate improvements to our current energy infrastructure (i.e. pipeline capacity), but I do not see it taking the next step to approving crude oil export. 

History has shown us that the price of oil is volatile.  Oil price spikes in recent history can be attributed to instances such as political unrest in Venezuela causing an abrupt and unexpected choke on critical oil supply to the US, violence and contention against export of natural resource in Nigeria (major oil exporter to the US), natural disasters/Hurricanes Katrina and Rita, and preparation for war in Iraq.   We’ve learned quite a bit from these cases and with technological advancements we’ve also discovered a decent supply of energy in our own backyard.  I believe the President will continue to support improvements in E&P efforts throughout the duration of his term, but I do not believe he will approve the export of crude.

Question 2

Do you, as a citizen / resident of the U.S., believe the exporting of crude oil (not condensate) should be approved?  Support your answer / thought process.

Answer – Question 2

Yes, but balanced with other main sources of revenue.  We need to optimize our country’s natural resources by maximizing the benefit long-term.  Export of crude oil will trigger several much needed boosts to our economy and initiate long-term projects needed for infrastructure development across the coastal regions to include the logistical lines to the coast in order to prevent unwarranted choke of supply and price volatility. Posturing now for future success sends a global message of confidence in our energy outlook, taking necessary action to establish energy independence (regardless of oil price) and a simultaneous foothold for balanced export across the world.  None of this is possible without modernizing our current energy policy to allow for export of oil and natural gas, triggering much needed investment in our energy infrastructure.  The incentive for private sector participants to fork out capital required to develop this infrastructure may not be as attractive as it was last year, but approval of crude export may provide just the right stimulation for long-term investment.  The approval of crude oil export also forces us to re-assess and refine other restrictions (i.e. permitting, Jones Act, and safety regulations), in order to allow for an improved, streamlined, and safe approach to optimizing total energy benefit for many years to come.  The goal would be to achieve self-sustaining infrastructure development as soon as possible (quick return on government’s investment) while balancing revenue intake from oil, not to exceed an agreed upon percentage of total revenue.  This will make investment in domestic E&P efforts, regardless of the high production levels of any oil producing country, more attractive versus investment abroad, also boosting businesses that service the extraction effort.