On Monday, the three commissioners of the Railroad Commission of Texas (RRC) gave separate testimonies at a joint meeting of the House Energy and International Trade and Intergovernmental Affairs committees. The topics at hand included U.S. trade policy and its impact on the energy industry in Texas and the United States. In layman’s terms: What to do with the crude oil export ban?
While the Railroad Commission does not regulate or collect data related to federal oil and gas export policy, testimony during the hearing specifically focused on HCR 57, urging the U.S. Congress to end the ban on crude oil exports, and HCR 63, urging the U.S. Congress to expedite natural gas exports.
In her testimony, Chairwoman Christi Craddick stated, “The U.S. crude oil export ban that was put into place decades ago no longer makes sense in current times.” Craddick is, of course, referencing the 1975 Energy Policy and Conservation Act. This piece of legislation was passed as a response to the 1973 oil crisis that caused everything from gasoline shortages to a (fabricated) panic of toilet paper scarcity. However, these were times when big oil-producing nations (the U.S. included) were reaching peak productions of their known oil supplies, a fairly different scenario than these past years of consistent shale production. Western Countries were then at the mercy of unfriendly politics in the Middle East.
“While trade restrictions put a strain on this important American industry and threaten future oil production, expanding markets for U.S. crude oil will incentivize production and create a more vibrant energy sector,” Christi added in her testimony.
Commissioner David Porter backed his fellow commissioner by explaining that not having the ability to export into the international energy market with every other country in the world “makes us subject to volatile OPEC prices.” Porter added that, “Currently, WTI crude is valued at around $50 a barrel, while Brent prices are roughly $60. That’s a 20 percent spread. With Texas producing (according to the EIA) about three million barrels per day, that’s about a billion dollar difference each month for our economy.”
Additionally, Commissioner Ryan Sitton commended the Texas Legislature for giving their support in lifting the ban. “The growth in production in Texas and the United States over the last six years has dwarfed production in other countries,” Sitton stated.
“We are in a position to establish a new normal whereby we get beyond discussions of energy independence and focus our efforts on dominating global energy markets. To fully realize this opportunity, the United States needs a comprehensive energy plan; something we haven’t really ever had.” Sitton noted this path of policy would include not only repealing the ban but also revising or eliminating the Jones Act and approving the completion of the Keystone Pipeline.
“I fully support our state’s strong stance to make these energy policy changes a reality and allowing Texans to compete in a market free of government manipulation.” Sitton said. You can read a full news release from the Railroad Commission of Texas here.