On 8 July, the US House of Representatives Agricultural Committee held a hearing to examine the economic impact that exporting crude oil would have on the rural and national economy. Members of the committee heard fro exports on energy development and the rural economy, who focused on the advantages of lifting the ban on oil exports.
“The majority of oil development takes place in rural areas like Texas’ Eleventh Congressional District, and when development slows or prices swing wildly, the health of those rural communities suffers,” said Chairman K. Michael Conaway. “Allowing a 40 year old law to dictate out nation’s energy policy is simply not in the best interest of the American people. According to studies, if we were to lift the ban today, we would see close to a million new jobs nationwide in just a few years. Lifting the oil export ban will grow our economy, it will also improve our geopolitical position and it will lower gas prices.”
Chairman Conaway’s opening statement on energy and the rural economy:
“The ban on crude oil exports was a 1970s effort to protect the US economy and US consumers, but over the past 40 years it has achieved the opposite result. While it may have been well intentioned at the time of enactment, the ban on crude oil exports is an antiquated relic and it is disrupting global energy markets, reducing domestic employment, and slowing economic growth throughout our country. We have heard repeatedly in this committee about the importance of agricultural exports to the rural economy. The same logic applies when it comes to exporting crude oil.
“After the ban was first imposed, its impact was muted by declining domestic production throughout the 1980s and 1990s. But today, it is no longer a benign Washington regulation. With the revolution in shale oil production, the ban has grown teeth and those teeth are taking a bite out of our economy, particularly our rural economy. The majority of oil development takes place in rural areas like my district, and when development slows or prices swing wildly, the health of those rural communities suffers.
“Job growth and wage increases are obvious benefits of expanding activity in the oil industry. But, rural communities also benefit in indirect ways, as well – land owners receive lease payments, residents have more disposable income to spend at stores and restaurants, and local governments see increases in sales, property, and income tax revenue. In fact, if the ban were lifted today, we would see close to a million jobs created over the next few years. My home state of Texas alone would see US$5.21 billion in income contribution by 2020, helping to propel our economy forward.
“We often hear about the strain on Americans caused by high energy prices. Nowhere is that more the case than on our farms and ranches where energy is often a very significant input cost, both in terms of fuel and in the cost of inputs like fertiliser. While the agriculture industry has dropped energy consumption nearly 30% since the 1970s due to innovation and improved production practices, the industry still spends nearly 18% of total farm income on energy inputs. Compared to their urban neighbours, rural households spend 58% more on fuel for transportation as a percentage of their income. Testimony we will hear today will shed light on how lifting the oil export ban will both lower and stabilise fuel costs.
“The Texas legislature recently passed with overwhelming bipartisan support, Senate Concurrent Resolution 13, ‘Urging the US Congress to end the ban on crude oil exports’. As many as 11 governors have written the administration calling for an end to the ban. In response, I have introduced a bill to address this issue, H.R. 2369, the Energy Supply and Distribution Act of 2015. Lifting the oil export ban will grow our economy, it will also improve our geopolitical position and it will lower gas prices. The oil export ban is a relic of the 1970s and should be eliminated.
“We have a panel of distinguished witnesses who will share their expertise on this issue. I thank each of you for taking time out of your schedules to be here with us today and I look forward to hearing each of your testimony.”
Written testimonies from each of the witnesses present at the hearing can be accessed below:
- David J. Porter, Chairman of the Texas Railroad Commission, Austin, Texas.
- Harold Hamm, Founder, Chairman and CEO of Continental Energy, Oklahoma City, Oklahoma.
- Terrance A. Duffy, Executive Chairman and President of CME Group, Chicago, Illinois.
- Kari Bjerke Cutting, Vice President of the North Dakota Petroleum Council, Bismarck, North Dakota.
- Jamie Webster, Senior Director of IHS, Washington, DC.
- Frank Rusco, Director for Natural Resources and Environment, US Government Accountability Office, Washington, DC.
Adapted from press release by Rosalie Starling
Read the article online at: https://www.hydrocarbonengineering.com/refining/09072015/us-agricultural-committee-holds-hearing-to-discuss-crude-export-ban-1066/