Remember the long lines at the gas stations during the 70’s? It was a time of trouble with the Middle East Oil barons. They are better known as Organization of the Petroleum Exporting Countries, or OPEC. Things got so bad President Carter put out a campaign to try to get people to walk everywhere. We’ve come a long way. Changes in America’s energy strategies make it likely that the U.S. will now be a leading energy trader in the world market.
For decades, the U.S. has depended on the Middle East for oil. Now, the U.S. has a surplus of oil. Europe has depended on Russia for natural gas, though it flowed through Ukraine. With the “change of the guard” in Ukrainian leadership, the U.S. also has an opportunity to become a World leader in natural gas. Take an insider look at what’s happening, what it means for the U.S., and how it impacts you.
New Technology Riddled with Problems
For the first time in almost a half of a century the U.S. has more oil and natural gas than it needs. New technology and more spots to drill at home opens a door of opportunity. Policy makers are changing their thinking. They may now think of their energy as a commodity, a very expensive one. If successful, it will bolster the economy to new levels.
A Congressional Quarterly report confirms this option. “Crude Oil and Natural Gas Exports: Opportunities and Roadblocks” was written by Geof Koss for CQ Roll Call. It shows that in 2005 U.S. crude oil supplies were at 174 billion barrels. In 2012, it was 238 billion barrels. Natural gas also has seen a big rise in production. The report shows gas reserves were 1,430 trillion per cubic feet in 2005. By 2012, it was 2,266 trillion cubic feet.
There are some problems. Old laws on the books are standing in the way of progress. As Koss points out, The Natural Gas Act of 1938 barred imports and exports of natural gas unless approved by the assigned agency, now the Department of Energy (DOE). But, the oversight of on and off shore facilities is done by the Federal Energy Regulatory Commission (FERC).
The DOE and FERC may grant natural gas exports if it decides it’s in the public’s best interest. Koss notes that in 1992, the law changed to define exports in the public interest for nations with U.S. free-trade agreements.
The two-Agency process for approval is slow and fickle. If America is going to have a big energy trade, it needs a better system.
The Energy Policy and Conservation Act of 1975 (EPCA) was passed when OPEC embargo caused gas shortages. The law barred exports of crude oil. The ban didn’t change refined oil products.
The EPCA does allow some exports. Some Alaskan crude oil and exports for use in Canada are on the list. International trade agreements may also permit it. And some refining and strategic petroleum reserve exchanges are included. The President has discretion under Executive Order.
According to a report by Brookings Institute, both President Reagan and Clinton wrote Executive Orders to expand exports to Canada.
The study is called, “Changing Markets Economic Opportunities from Lifting the U.S. Ban on Crude Oil Exports.” It was written by Charles Ebinger and Heather Greenley. Their research shows huge economic gains are open if the U.S. opens exports.
In a minute, we’ll look at how Congress is working to make a better path for our energy interests. But first, let me tell you why it is so important. But first, let’s see why change is needed.
U.S. Oil Trade is the New Frontier
If you look at the different energy policies in the U.S., they seem scattered. You wonder what they’re doing. But if you look at it from the big picture – it’s awesome.
The new excess of energy can capture a brand new market for the U.S. that had been closed to it. And it is a lucrative market. As they think about the choices, here is what our decision makers are looking at.
If policies are changed to export our excess oil, the economy would grow from the money we receive. But it would have a much bigger impact if the U.S. expands its control over oil and natural gas throughout the world. It is the leadership policy changes we’re seeing on the Hill.
I’m going to share with you a secret. What we’ve been told by Obama and the media is only a partial truth. They’re hiding the best part…
The Real Motive Behind the Keystone Pipeline
The media shows the fight between President Obama and Republicans over the Keystone Pipeline. We hear how Republicans are pushing for it because it adds jobs. It promotes small businesses and brings new technology. At the same time, they tell us of the President’s veto threats and his concerns for the environment. All these facts are true, but that’s not why Congress is pushing so hard for it.
That’s right, Congress! Not just Republicans. Not just Democrats. In both the House and the Senate, their energy committees are designing sound policies for America’s new frontier. And they’re coming up with great bipartisan laws.
Why do you think they’re willing to work together so hard for a pipeline? It’s because the U.S. is working with our border neighbors so that North America can gain world dominance in the energy market.
The pipeline is good for the U.S. and Canada. Canada’s needs are simple. They want assistance getting their energy sources out of the country. The pipeline lends big help for their goal to increase their exports.
The U.S. wins on several fronts. It creates jobs and builds new technology, it brings Canada’s oil into the U.S., where the U.S. will have use of it and it gives the U.S. a chance to work out special trade agreements with Canada to partner with them in exporting their oil out of the U.S. This would raise more revenue for Americans.
And there’s more.
Changes in Mexico’s Oil Industry Equals Dollars for U.S.
For over seven decades, Mexico’s oil industry was state-owned. As Forbes mentions, in 2013, Mexico chose to shift its oil to the private sector. Mexico’s choice to open its oil trade to the private market doors for U.S. trade with Mexico. It also gives U.S. investors growth opportunities.
There are different types of crude. The U.S. and Mexico each have what the other needs. Ebinger explains in the Brookings report that the U.S. produces light crude. But U.S. refineries are not well-suited for it. It needs heavy crude. Mexico produces heavy crude and needs light crude to increase its operations. A great match!
If the goals work, the U.S. will be at the center of a North American magnate.
The Financial World Hungers…
The moves haven’t escaped the financial moguls. They are licking their lips in anticipation. Research reports and white papers help them stay focused on goals. A study by Citifinancial says that North America is poised to “become the new Middle East” in oil. The report, “Energy 2020: North America, the New Middle East” was written by Robert Morse. It notes that the U.S., Canada and Mexico will become “a crude oil exporting center.” That means big bucks, jobs and booming growth for Americans.
And that’s not all!
Ukraine’s Energy Path to Europe
An article, “Timeline: Ukraine’s Political Crisis” from Aljazeera, reveals a vital point. Trouble in Ukraine began when President Viktor Yanukovych announced he was going to abandon a trade agreement with the EU for natural gas. He was seeking closer ties with Moscow. It was November 21, 2014. By November 30th, things turned ugly in Ukraine and has not yet been fixed. Russia claims the West caused the civil unrest. He blames Obama.
There’s no proof, but it wouldn’t be a surprise if it were true. Ukraine is a key intermediary for Europe’s natural gas. It passes gas from other sources into Europe, mostly from Russia. If the EU had to deal with Russia directly, it could be a big problem. It may result in higher prices. And with threats of restricting oil to the EU, the West was destined to take action.
While it looks like a problem for the West, it actually opens doors for the U.S. to step in as the new source for EU’s natural gas.
According to the BBC World news, “Russia’s supply lines run through Ukraine to several EU countries and as much as 70% of its gas to the EU is carried through those pipes. So while Russia has in recent years tried to bypass Ukraine, in particular with the Nord Stream and South Stream projects, the two countries are, for now, inextricably linked.”
There is all this opportunity, but the laws need to be changed. What can be done in this political era?
Congress without Gridlock?
Policy makers see this as a great chance to take Americans to new heights around the globe. Despite a naysayer president, they are determined to make it work. Both the House and the Senate are working on bipartisan Bills that will open these doors.
The Senate’s Committee on Energy and Commerce is well known for its bipartisan success. They have made an action plan to move forward. It is called, “Energy 20/20: A Vision for America’s Energy Future.” The plan was written by Senator Lisa Murkowski, a Republican from Alaska with support from the Committee. The blueprint lays out specific goals for new laws to make it work. Their plan is to reach “full independence from OPEC oil by 2020.” They show ways to reach their aims without raising taxes. In fact, they expect it to add revenue.
The House is working on an action plan too. It’s called, the Architecture of Abundance: A Legislative Framework.” The Committee headed by Chairman Fred Upton has goals to grasp America’s “energy renaissance.” They say their plan will “fuel the economy for years to come.”
Their goals are to fix the infrastructure to meet modern needs. They want to build a 21st century energy workforce. Like the Senate, they want to shape the industry through the North American platform. The pipeline would be a part of the plan. They say it will make America a global energy leader. And it will make us less dependent on OPEC. A core goal is to do the plan efficiently and with accountability.
If successful, America will prosper for some time to come. They do point out that it will not happen overnight. On the House Energy & Commerce Committee website, Representative Lee Terry (R-NE) points out some tools they are using to get it moving. In one of the laws, The Northern Route Approval Act, the goal is to get the Keystone XL pipeline through. He notes that it allows them to move forward without presidential approval. But he also says that there are still obstacles that they need to work on.
The fact that they are working together on common goals is great. It also gives many people an opportunity to hop on board in this rising market!