Below are highlights from the statement made by Mark Kreinbihl, Group President, Gorman-Rupp Company, before the Subcommittee on Energy and Power, US House of Representatives on ‘H.R. 702, Legislation to Prohibit Restrictions on the Export of Crude Oil.’
“When the US shale energy revolution took off a few years ago, it created a new and rapidly growing market for our company serving the energy sector with our line of pumps. This allowed us to expand our business and employment in the midst of a very steep recession in our traditional construction markets. Business from the energy sector caused our order volume to recover rapidly, and in fact by early 2012, while the construction sector was still quite depressed, our energy related business caused our orders to achieve record levels.”
“From a point near the end of 2014 until now, as a result of our energy customers’ inability to export and the resulting depressed domestic prices at which they must sell their crude oil, they have cut back dramatically on drilling activity. The US rig count plunged from about 1800 to 800 while at the same time our orders have followed the rig count down, declining by 40% from late 2014 through this June. Currently, we are seeing activity at about 23% below our forecast, and 11% below 2014. From just two of our distributors alone, we recently had order cancellations in the amount of US$4 million.”
“Congress can help increase markets for American produced crude oil by lifting the ban on crude oil exports. Why would that help? There are several important reasons:
“Crude oil moves around the world in what is a global energy market. By banning the export of crude oil, we artificially put the US energy sector at a competitive disadvantage by removing exports as a potential market at a time when the US is in a worldwide battle for energy market share. IHS Economics estimates that lifting the ban would increase US crude oil production by up to 2.3 million bpd average between 2016 and 2030.
“This new production will drive substantial additional investment in products and services from the crude oil supply chain, generating up to US$63 billion of supply chain economic output nationally.
“This investment would create up to 440 000 new supply chain jobs nationally by 2018.
“These export dependent jobs and GDP growth are widely spread throughout the American economy. They would exist in all 50 states and throughout 60 different industry sectors. Of the national supply chain job gains, 10 of the top 15 states gaining jobs are non-producing states. By GDP growth, 11 of the top 15 states are non-producing states.
“The Energy Equipment and Infrastructure Alliance (EEIA), of which may company is a member, estimates that there are at least 120 000 supply chain businesses and 615 000 workers supporting American oil and natural gas production, of which at least 100 000 are small businesses.
“The US energy sector has been a leader in developing new technologies for energy exploration and extraction. Taking advantage of those technological advances before competitors do would continue to give the US energy industry incentives to innovate and become even better at finding and extracting oil and natural gas in an efficient and safe manner.
“At a time when the US continues to see sluggish growth in the kind of good jobs that the energy sector provides, lifting the ban on crude oil exports is a step that could yield almost immediate results.”
Edited from statement by Claira Lloyd