Energy industry: Thank fracking for Memorial Day driving on the cheap
By John Siciliano | May 21, 2015
The oil industry is touting shale oil and fracking for making Memorial Day driving more affordable this weekend.
“Thanks to hydraulic fracturing and horizontal drilling, the U.S. is experiencing a renaissance in domestic oil and natural gas production. The benefits for U.S. consumers — as well as manufacturers, the travel and tourism industry and frankly our entire economy — are hard to overstate,” John Felmy, chief economist with the American Petroleum Institute, said in a conference call with reporters.
Hydraulic fracturing is the process by which water and sand are injected deep underground to release oil and gas from large shale rock formations. The advent of new drilling technologies that enable oil producers to drill horizontally through the formations has made the process more affordable, leading to an energy renaissance in the country and the United States becoming a global leader in oil production.
The increased production has caused the U.S. to import less from Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries. That has led to more supply being available on the global market, deflating the price per barrel of oil, which in turn has lowered gasoline prices for consumers.
Felmy said the national average price of gasoline is about $1 per gallon less than it was at this time last year, based on data from AAA. The association also said more drivers will be on the road over the weekend in the Mid-Atlantic region compared with last year, with some states projected to experience the highest number of travelers on the road in a decade.
Oil shale production has provided “welcome relief at the pump,” he said. Without the added supply, some have suggested price per barrel could have climbed as high as $150 per barrel. Today’s prices are between $59 and $66 per barrel, compared to nearly $100 a year ago.
Felmy said the advent of shale production should keep the “new equilibrium below the 100 dollar mark.” He said the government should not take low prices “for granted.” Instead, the more affordable gasoline prices should spur policymakers to keep regulations predictable for oil producers and avoid punitive tax regimes.
“In order to maintain a robust supply of domestic oil, it is essential that the industry be allowed to affordably and predictably explore for and develop new resources,” Felmy said.
“That means companies must be able to lease acreage and obtain permits in a timely fashion. It also means the federal and state governments should avoid punitive tax regimes that would cause energy companies to look elsewhere for the best opportunities,” he said.
“With the right policies, our energy renaissance can endure for decades and help even more families afford to take a vacation on Memorial Day weekend,” he said.
The Interior Department’s Bureau of Land Management is on track to implement new regulations for fracking that the industry is warning could increase the cost of production. Several states and industry are suing the agency over the rules that are set to go into effect next month.
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