OPEC's quotas 'an act of aggression' that demands counter-offensive: Texas regulator

Published June 10th, 2015 - 04:30 GMT
Some US lawmakers are arguing to repeal a longstanding ban on US crude oil exports. (Shutterstock)
Some US lawmakers are arguing to repeal a longstanding ban on US crude oil exports. (Shutterstock)

The U.S. government needs to overturn a ban on crude oil exports as a counteroffensive to the oil war waged by OPEC, a Texas energy regulator said.

The Organization of Petroleum Exporting Countries during meetings last week in Vienna opted to keep production levels static, noting "market stability remains a common objective" amid signs of modest demand growth in the second half of the year.

David Porter, a member of the Texas Railroad Commission, the state's energy regulator, sent a letter to state lawmakers describing OPEC's decision as an act of aggression.

"OPEC's choice to flood the market with crude is a clear and direct effort to stifle successful American drilling, using artificially cheap fuel as their weapon," he said.

Oil prices are down about 40 percent from one year ago as U.S. oil production increases in a global economy still emerging from recession. The low price of oil has translated to less spending on oil exploration and production and preliminary data from March show crude oil production in Texas averaged 2.31 million barrels per day, down from the 2.34 million bpd reported in February.

Porters said keeping the exploration and production sector strong was vital for American energy security, shielded the U.S. economy from the whims of adversaries like oil-rich Russia and Venezuela.

"Critical to achieving energy security is leveling the playing field against the likes of OPEC through Congressional repeal of the decades old prohibition on crude oil exports, and allowing Texas and U.S. oil producers to compete on the international free market," he said.

Arab members of OPEC in the 1970s briefly cut oil exports to the United States in response to policies on Israel. U.S. leaders responded by banning exports of domestic crude oil. With U.S. oil production at historic highs, thanks in part to an increase in production from shale deposits in Texas, some industry supporters have argued it's time to repeal that ban.

Sen. John Cornyn, R-Texas, last week introduced export amendments to a strategic defense act, arguing U.S. and NATO allies are vulnerable to the whims of oil producers, and U.S. adversaries, Iran and Russia.

"These amendments would strengthen the strategic hand of the United States in a world that grows more complicated by the day, not to mention more dangerous," he said.

A report from the non-partisan Congressional Research Service finds some overseas refineries aren't designed to handle the lighter oils from the United States.

By Daniel J. Graeber Follow @dan_graeber

 


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