Below are the final highlights from a press conference held by the API where Jack Gerard answered questions on the 2015 State of American Energy. For Part 1 click here and Part 2 click here.
Which do you see as more likely? The administration acting on lifting the ban or Congress actually legislating to do so? And where does it rank with API’s priorities and what are you doing to lift the ban in 2015?
“Well, as a matter of our priority, it’s a top priority for us. We believe crude exports should be focused on early and the quicker the action, the better it’ll be for the economy, the better it’ll be for the American people. So for us, it is a top priority. Now, having said that, we believe that the Congress and the administration should work together in tandem. The President can exercise his authority. And just a week or two ago, they clarified the issue of condensates. And they said while it wasn’t a change of policy, it clearly sent a signal to the marketplace as to what would be allowed and what might not. That’s a positive step. To make clear, we’re going to allow this economic activity; we’re going to allow this trade to occur.
“But we’ve got to take the next step and deal with that fundamental, as I like to call it, the relic of the past; back in 1970s when it was first imposed when we had gas lines in this country. Now we have rich abundance. We need to think of this new opportunity as truly a new day. And that’s why we hope the administration and the Congress working together can address it in their respective roles, but ultimately we get to the place sooner rather than later where we have free open trade where we can really take advantage of this American opportunity.”
What do you see the overall effect on the US economy based too on what we’ve seen in the stock market in the last couple of days on the falling price of oil?
“You raise a good point because volatility is something none of us like. We prefer stability longer term; it makes for better investment decisions. It allows the industry to see the future more clearly and in a more stable fashion. So, when we think about the longer term price and what its impacts might be, as I mentioned, as we gear up as a nation, as we take advantage of the opportunity before us today to indicate to friend and foe alike around the world that we are going to be a dominant energy player, particularly in the oil and gas space, I believe longer term it does bring more stability to the marketplace. What we’re doing today in the US has already contributed to stability.
“Let me tell you what I mean by that. With oil prices where they are today, many of you might find that interesting. However, Adam Sieminski, Director of the EIA, said that but for the increase of domestic production today, that additional 3 – 4 million bbls we put in the marketplace, the price of crude oil globally today would likely be over US$150. The reason it would be is because we would be relying on the sources of crude oil that we’ve been relying on for many years. Today it’s different because now we are becoming the number one producer. We are taking our future under our own control, under our own initiative. And while there might be volatility in the short term, in terms of being unhappy with high prices, low prices, et cetera, we longer term contribute stability to the price and to the global marketplace because now we have control over that process where we’re the major player contributing to the global market.”
In the short term, do you see producers in the US struggling through the first part of 2015, especially smaller US oil producers?
“Let me just say generally, the price today obviously has some impacts. You read where a number of our companies have made decisions with their investment, their expenditure budgets, et cetera. And that will vary based on company to company, which plays they’re in, where they’re positioned, how much resource they have to invest in further development. But let me overlay that, if you will, with that longer term projection. The US economy we hope will rebound in a very robust way, which means more energy need. We hope the world economy, Europe, Asia and elsewhere, will continue to rebound. It’s the combination of the combination of the revised expectations of slower growth around the world that has contributed, coupled with the increased supply, that’s contributed to the price and the drop of crude oil. So, longer term, you see the demand for our product continue to grow.
“When it stabilises, when does it continue to turn back up or stabilise long term? I can’t predict. I can’t predict the price. What it clearly shows is that what we’re doing in the US has implications for the global market and clearly for the domestic market. The more we produce, the more we put our people to work, the more opportunity we have to benefit consumers at large.”
Edited from transcript by Claira Lloyd