Chris John, President of the Mid-Continent Oil and Gas Association is well known as a mouth piece for the oil and gas industry. His family has operated a oil field trucking company in Louisiana for many years and John can not be expected to render an independent judgement concerning the industry. In his latest editorial he says its time for congress to lift the ban on American crude oil exports. Congress passed that oil export ban in 1975 for good reason and it is still working.
John says in the editorial if the ban is lifted U.S. production would increase to 11.2 million barrels of oil per day from the current 8.2 million barrels of oil per day; would create 63,000 jobs; save American consumers $5.8 billion per year; would increase revenue for Louisiana; lower gasoline prices; grow the economy and a host of other goodies. It is the same song the industry tries to sell over and over again.
How will an increase of 3 million barrels of oil per dayfor export make the U.S. less dependent on imports? It won't. As of the moment U.S. crude production is the highest it has been in a few decades. That is one of the reasons the price of a barrel of oil and a gallon of gasoline has been falling. That is also the reason the subject matter is coming up now. It is timely for the industry because the republicans will control congress next month and the oil industry wants to call in its chips.
The falling price of a gallon of gasoline is saving consumers money now while the export ban is in effect. Lifting the ban will not lower that price because that would make the price more available to manipulation. As far as increasing Louisiana's revenues don't believe it. Louisiana was promised that when the legislature gave the industry tax breaks and exemptions for drilling and production of natural gas from the Haynesville shale. So what did the industry do? Well, they diverted their natural gas drilling and production from other areas that did not have the tax breaks to the Haynesville shale area and Louisiana's severance tax revenue fell. That story was run in the Times Picayune as a reason state revenues were not keeping up with state expenses and revenue projections.
How will lifting the export ban improve the U.S. energy security? It won't, that is why the Strategic Petroleum Reserves was created in the 1970's. The bottom line is that the industry has the ability to make the U.S. independent of foreign oil in a reasonable period of time if they wanted to. They have the leases, the know how and the finance to do so but as this writer has pointed out the industry would have to stockpile the supply and when supply out strips demand, lower prices occur. That is what is taking place now with the drop in prices.
John and the industry want to export that additional production to have more control over the international market than it has now and to keep prices inflated. That is the reason for the Keystone XL Pipe Line that would carry dirty Canadian crude through the U.S. for gulf ports to refine and then export the refined product. The U.S. territory would be used only as a transit point. Nothing there either that would make the U.S. independent of foreign oil.
And all the while the domestic oil industry enjoys tax breaks and exemptions worth $8 billion. It is the same story, those that have so much are never satisfied. Chris John opposed the BP Moratorium and also opposed the Levee Boards suit against 97 oil and pipeline companies whose operations destroyed the state's environment. That should tell one what little respect he has for the state or its people.
This commentary written by John Lucia.
