Oil is heading to its lowest point in twelve years and the risk for the US economy to go down with it increases every day. This has prompted calls by lawmakers for Congress to help struggling energy companies with policy fixes that do more than just lift the ban on oil exports.
The ban was lifted last month, and while it is expected to add 500,000 barrels per day in exports, it has so far done little to raise prices. House Energy and Commerce Chairman Fred Upton (R-Mich.) and Senate Energy and Natural Resources Committee Chairwoman Lisa Murkowski (R-Alaska) are planning to meet next week to discuss steps to have both chambers move on the issue later this year.
Upgrading infrastructure and expediting the process for liquefied natural gas are amongst the proposals. Loosening environmental and other regulations are other priorities but considered a longshot at best as long as Democrats are in control of the White House. Senator John Hoeven (R-N.D.) for example, claims the Obama administration has proposed nearly 100 regulations for the oil and gas industry, from restrictions on methane and carbon dioxide to limits on operating on federal land. “We really are right now locked in a global battle between OPEC and Russia, countries like Venezuela — we’re really battling out to see who’s going to provide oil and gas. That’s why it’s so important that government create an environment where we can compete,” according to Hoeven.
Bankruptcies in the energy sector, China’s fluctuating currency, Goldman Sachs warning that oil might sink as low as $20 per barrel, Third Avenue Investment’s block of clients pulling their money, all have shaken the markets. In the meantime, growing tension in the Middle East after Saudi Arabia executed a Shiite cleric has not driven up oil prices as some expected. It is uncharted territory in many ways and is fueling the call for immediate action in Congress.
Some lawmakers like North Dakota Rep. Kevin Cramer (R) contemplate tariffs against Saudi Arabia but would prefer other measures first like reducing cumbersome regulations. “I’m very hesitant to go down that path at this time but clearly that would be a possible option should the Saudis not play fair. Because as much as I advocate for free and open markets, I also advocate for fair markets. I’m not prone to a lot of government intervention in terms of propping industry up, per se. What would be the most helpful is to roll back regulations that get in the way of further development and profitability,” Cramer states. The Endangered Species Act is considered a regulation that should be dropped for example.
It is very clear that if the energy sector remains weak, it is bound to generate more proposals to deal with the issue. These proposals will most likely include the ability to drill on federal land and more infrastructure projects, mainly aimed at expediting the construction of pipelines.