Below are further highlights from a testimony given by Erik Milito, Group Director of Upstream and Industry Operations, American Petroleum Institute, before the Senate Committee on Energy and Natural Resources Energy Supply Bill hearing.
“Three of the supply bills that are being discussed today will effectively move us past self imposed energy prohibitions. S. 1276, S. 1278 and S. 1279 would open highly promised areas of Alaska, the Gulf of Mexico, and the Atlantic OCS to energy exploration and production. Provisions are also included to provide revenue sharing to coastal states, much like the revenue sharing currently provided to those states that see federal onshore production within their borders. It is these types of legislative proposals that acknowledge that we will need oil and natural gas for decades to come and recognise our strong capacity to safely and responsibly produce those resources here at home. These bills embrace a long term, comprehensive approach to energy policy, because steps like these will help ensure we have the necessary energy for our citizens, five, 10, 15 and more than 20 years down the road. To be sure, the offshore energy that we produce today is available because of smart policy decisions made 10 – 15 years ago. And we need smart energy decisions today to provide energy stability for the generations to come.
“Moreover, the ability to produce oil and natural gas within our own borders reverberates prominently around the globe. The positive geopolitical and national security implications of America’s emergence as a global energy superpower are huge. Fundamentally, the more oil and natural gas that the US produces here at home, the less the US and the rest of the world need to buy from unfriendly regimes that often use energy as a political weapon.”
“With respect to oil, both increased supplies and the decrease in the price resulting from America’s energy boom weigh heavily on certain oil producing regimes. According to The Economist’s editorial, ‘Many winners, a few bad losers’ published on October 25, 2014, ‘For those governments that have used the windfall revenues from higher prices to run aggressive foreign policies…things could get uncomfortable. The most vulnerable are Venezuela, Iran and Russia.” According to The Economist, Iran requires oil prices of US$140/bbl, Venezuela requires US$120/bbl, and Russia too requires high prices to meet government budgets. The US energy revolution has helped to drive prices well below those levels.
“The energy renaissance has put the US in a better geopolitical position than few could ever have imagined. Increased US production alone is having a significant impact on the balance of global power. By opening up its borders to the free trade of oil and natural gas, the US could have an ever greater impact, and we would be responding directly and positively to the pleas of our allies. Exports of these commodities will not only serve our natural security interests…but they will also allow for greater production of oil and natural gas in the US, spurring additional spending and job growth throughout the country. However, applications to export LNG linger in government bureaucracy, and crude oil exports are subject to a 1970s era ban that has long outlived any purpose it may have served. It is in the vest interests of the nation to make the necessary decisions to expedite exports of both oil and natural gas. Fortunately, we have seen positive movement on the legislative front and leadership from the members of this committee to advance these critical free trade policies. But time is of the essence.”
“In conclusion, what is needed today are policy choices to increase, not decrease, energy production. Barriers to oil and natural gas production only contribute to volatile energy prices, slower economic growth, and lost American jobs. Our history is replete with short term energy fixes and false promises of silver bullets to solve our nation’s energy problems. Today, we need to take positive steps to ensure that we will meet America’s energy needs in the decades ahead. These policy decisions should include a commitment to the following:
- Increase, not decrease energy production by promoting all sources.
- Encourage energy efficiency.
- Encourage investment in advanced energy technologies and long term energy initiatives.
- Allow market forces to allocate products and adjust to changing conditions.
- Refrain from new taxes that make it more expensive to develop domestic supplies.
- Support participation in global energy markets.
“Over the past 6 years, we have seen increasing US oil and natural gas production drive economic growth and global energy security. We now need policy decisions to secure this path for the decades ahead. This hearing and many of the proposed bills are constructive steps forward.”
Edited from testimony by Claira Lloyd