Railroad Commission Chairman David Porter testifies before U.S. Agriculture Committee

Testimony focuses on benefits of lifting federal ban on oil exports Oil & Gas Editor


 

 

Railroad Commission Chairman David Porter On Wednesday, July 8, in Washington D.C. Texas Railroad Commission Chairman David Porter testified before the U.S. Agriculture Committee on the importance and urgency of lifting the federal ban on crude oil exports. His testimony emphasized how lifting the ban on crude oil exports would spur new American energy production, foster economic growth and provide direct benefits to rural America and the nation as a whole.

Porter said,” The U.S. crude oil export ban is a left-over relic from another period of time. Forty years ago the United States was in the midst of the Arab oil embargo and faced gasoline shortages across the country. The crude export ban was put in place out of fear of increased dependence on foreign oil and the need to protect our dwindling domestic oil supply. The world today is a much different place and the circumstances we faced in the 1970s are no longer relevant or true today.

“The export ban is more than just an outdated policy. Keeping it in place is actually harming our economy.”

The Chairman reported that the Texas Railroad Commission has recently seen a dramatic drop in the number of issued drilling permits – from 2,389 in May of 2014 to only 916 as of May this year – and that in addition to being outdated, the ban is actually harming the economies of Texas and our entire nation.

“In Texas, we understand and experience firsthand the link between U.S. oil and natural gas production and the strength of the economy,” Porter said. “The two are inextricably linked. When oil prices recently dropped, we felt the economic impacts at home. We saw thousands of hardworking men and women put out of work and rigs idled. We saw state revenues – used to support schools and infrastructure investments – decline.”

Porter also cited recent studies from the University of Houston and Rice University, which report that each drilling rig represents a total of 224 jobs, including those on the rig itself and those across the supply chain and in the broader economy.

“With the loss of 1,072 rigs through June, you can do the math to see just how devastating the recent downturn in development has been for oil and natural gas producing states,” Porter stated. “It comes to roughly 240,000 jobs. While repealing the ban will not bring back these jobs overnight, it will certainly get some of these men and women back to work in the near term.”

Porter also highlighted that the crude oil export ban is responsible for the disparity between West Texas Intermediate (WTI) – the U.S. pricing benchmark for crude – and the international benchmark, Brent.

“The majority of the new oil being produced from our shale formations is light sweet crude and the U.S. refining capacity is not designed to economically handle the increased volumes of this type of crude,” Porter explained. “As a result, our oil is essentially trapped in the U.S., creating a supply glut that is driving down the price of U.S. oil. This represents billions of dollars of lost revenue that could be pumped back into the U.S. economy.”

Porter said, “Lower fuel prices would be especially beneficial to farmers and rural Americans. As you are aware, agriculture is an energy-intensive industry and rural Americans spend more money on fuel as a percentage of their income than urban residents. Lower gasoline prices would provide a significant economic boost for many of these families and small businesses.

“Lifting the ban will enhance free trade and lower the U.S. trade deficit. The U.S. exports all types of goods and commodities, from fruits and vegetables, to cars, to computer software.

“Allowing the free trade of oil would make the U.S. a true global energy leader and super power. It would mean hundreds of thousands of new jobs for Americans, thriving communities with vibrant economies, and families saving money every time they fill up their cars. This is the world I want to live in, and the world we can live in if Congress and the President take immediate action to lift the crude oil export ban.”

The Chairman hailed the efforts of Texas leaders who advocate lifting the ban, detailing how earlier this year, the Texas Legislature passed and Governor Abbott signed a resolution asking the U.S. Congress to lift the ban on crude exports. He emphasized the multiple benefits that would result for both Texas and the United States if that happens.

LEON ZABAVA is the Oil and Gas Editor for the Pleasasanton Express. He can be reached at 830.281.2341 or lzabava@pleasantonexpress.com


Nighttime photo at Abraxas Petroleum drill site in the Eagle Ford Shale just south of Pleasanton. Notice moon showing through oil derrick.

Nighttime photo at Abraxas Petroleum drill site in the Eagle Ford Shale just south of Pleasanton. Notice moon showing through oil derrick.

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