This March 13, 2012, photo shows older and newly constructed 250,000 barrel capacity oil storage tanks at the SemCrude tank farm north of Cushing, Oklahoma. The United States has allowed the export of its oil after producing and importing an average of 1 million more barrels of oil every day than it is consuming. U.S. supplies are at their highest in at least 80 years, the Energy Department reported on Feb. 25, 2015. AP
WASHINGTON, United States — Oil prices have remained low despite heightened tensions between two of the world’s big oil-producing countries, Iran and Saudi Arabia, and a new law allowing U.S. crude exports helps explain why, the oil industry’s top lobbyist said Tuesday.
Jack Gerard, president and chief executive of the American Petroleum Institute, said the 3-week-old law lifting a 40-year ban on crude exports has already changed the dynamics of the global oil industry.
The potential for U.S. exports, combined with the ongoing U.S. oil boom, means “the United States has come in as a major player” in the global oil market, reducing the influence of countries such as Saudi Arabia and Iran, Gerard said.
“The geopolitics of energy will never be the same,” Gerard said in a speech outlining the industry’s priorities for the year.
READ: Why US will lift restrictions on oil exports | Oil prices fall despite Saudi-Iran tension
The price of oil fell 30 percent last year, following a 50 percent plunge in 2014. At below $36 a barrel on Tuesday, the price is down more than 2 percent so far this year. Even heightened tensions between Iran and Saudi Arabia have failed to halt the slide amid a persistent glut of oil.
Oil prices are likely to remain about where they are until either production drops or the world economy perks up and drives demand higher.
Gerard said the situation stands in stark contrast to what could have been expected 10 years ago. “Oil would have spiked,” he said.
The API and other industry groups pushed hard for the measure lifting the export ban, which they called a relic of the 1970s, after an OPEC oil embargo led to fuel rationing, high prices and iconic images of long lines of cars waiting to fuel up.
The ban was lifted as a part of a massive, year-end budget deal approved by Congress and signed by President Barack Obama last month.
Despite that victory, Gerard criticized the Obama administration for imposing what he called unnecessary regulations on oil and gas drilling, especially on federal lands, and blasted the president’s plan to curb greenhouse gas emissions from new and existing power plants. Gerard also took aim at the president’s rejection of the proposed Keystone XL oil pipeline from Canada, saying it was based on “political ideology” rather than sound policy.
“The stated reason for denying the pipeline — environmental protection — was contradicted” by Obama’s own State Department, Gerard said, noting that the department issued five reports that determined the pipeline would not significantly affect carbon pollution levels.
Rejection of the pipeline actually could increase carbon emissions by some 42 percent due to an increase in truck, rail and barge traffic needed to transport oil from Canada’s western tar sands to refineries along the U.S. Gulf Coast, Gerard said.
Gerard also renewed his call for the administration to scrap a Renewable Fuel Standard that promotes corn-based ethanol and other alternative fuels, labeling the mandate another relic of the past.
As Obama begins his final year in office, “we hope that he’ll see that overregulation … hinders rather than advances what he hopes to be one of his administration’s defining legacies, environmental improvement,” Gerard said, citing nearly 100 regulations imposed by Obama on the oil and gas industry.