WASHINGTON -- As prices for crude oil and gasoline hit near-term lows, fueled by the U.S. production boom and world demand trends, the American Petroleum Institute (API) again urged the United States to seize its destiny as a top global energy producer.
"America's emergence as a global energy leader has fundamentally reordered the world's energy markets, by elevating the importance of North American energy production and reducing what had been the dominant roles of OPEC and Russia," said Jack Gerard, president and CEO of Washington, D.C.-based API, which represents the oil and natural gas industry, during remarks covering the release of its 2015 State of American Energy report.
Click here to watch the webcast.
"And if we get our energy policy right, this unique American moment could support millions of well-paying jobs and expand the participation of traditionally underrepresented groups, which will be critical to fulfilling our nation's bright energy future."
During his speech and a later question-and-answer session with the press, Gerard argued that the current low oil prices were a temporary blip against a longer-term trend of rising global demand, and highlighted what API considers two unique opportunities in getting U.S. energy policy right.
Building the northern portion of the Keystone XL pipeline continues to be a major priority for API. This is as the Obama administration's approval process stretches into its sixth year, and after the president recently downplayed the economic advantages of the pipeline to the United States, arguing it mainly benefits Canada and that most of the jobs will be temporary.
Gerard criticized the president's focus on the temporary nature of the 42,000 jobs that Keystone XL is expected to support. "Other great public works projects were built with temporary jobs," he said. "The president's job is temporary. Temporary jobs are good for the economy."
At around the same time as API's Q&A, word spread that the president's press secretary had just confirmed Obama would veto Keystone legislation currently pending in the new Congress. The president does not want his hand forced as the State Department finishes its analysis of the project and the Nebraska Supreme Court decides on whether the pipeline may pass through the state.
After told about the president's veto threat, Gerard said he was disappointed but optimistic that the pipeline would eventually get approved sometime in 2015. This is despite not only the political headwinds but also the impact of cheap crude on the current economic attractiveness of the pipeline. Here, Gerard argued that market forces should ultimately decide whether Keystone XL gets built.
"The economics of Keystone XL pipeline or any pipeline for that matter ... should be determined by the marketplace," said Gerard, noting that TransCanada Corp., which hopes to build the northern portion of Keystone XL, has indicated it still plans to go forward with the project. "This is private capital, this is private investment," he continued. "Let it follow the market, and let the market determine what should and should not be built."
And in terms of political opposition, Gerard was optimistic that supporters of the pipeline would prevail.
"There's lots of ways to get something done in this town," he said, citing what he believes is growing support for the pipeline in Congress among both parties.
"Does that mean we will ever get to the point of a veto override? I'm not sure," he continued. "I'm hopeful we don't have to get to that point. I'm hopeful cooler heads will prevail, we'll all get on the same side of the table … to say what's truly in the national interest of the United States? And I believe the evidence weighs so heavily on the side of approval that hopefully people can work that out in whatever form on whatever piece of legislation, and get to yes."
Another big item on API's agenda is opening up crude exports, which have been banned since the 1970s. Gerard argued that crude exports would ultimately benefit American consumers, citing studies that suggest an impact of two to 10 cents per gallon on the price of gasoline.
"There are some whose minds are still stuck in the old 20th-century mindset of scarcity and dependence, which we've moved beyond now because of technological advancement, to an opportunity of rich abundance," said Gerard.
He was encouraged by the Obama administration's recent decision to expand exports of condensate, or lightly processed crude. "That's a positive step--allowing this trade to occur," said Gerard, who then urged taking the next steps and broadening the expansion, and getting over old worries about supply scarcity.
"We need to move those to the new energy reality, which says we have adequate resources, we have vast amounts of crude oil in this country, we have technological advantage to produce it safely, soundly, transport it by building the infrastructure," he said. "It's a unique American moment that should transcend the old relics of the past, the old philosophies, and get us to a new place as a nation."
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.