The price of oil and global demand have dipped in recent weeks, but Houston-based ConocoPhillips (NYSE: COP) Chairman and CEO Ryan Lance still sees a critical long-term need for the U.S. to loosen its ban on crude oil exports.
Although oil prices have exceeded $100 a barrel for most of the year, global Brent pricing for oil was below $98 a barrel at the end of last week, while West Texas Intermediate pricing was just more than $93 a barrel.
“Certainly, with the geopolitical events that are going on in the world today having an influence, you see the demand loosening up,” Lance said in a sit-down interview with the Houston Business Journal. A more detailed interview will run in the Sept. 22 weekly edition.
“I think the one bright spot is what’s happening here in North America, in the United States, growing (production),” Lance said. “It seems like demand is softening back again in Europe. Certainly in the developing countries in Asia, demand is softening a little bit. You have that, combined with this surge in light oil production in the U.S., which really has filled the void created by sanctions in Iran, Libya problems, Iraq production not growing as fast.”
He said “supply-and-demand fundamentals” still support global oil pricing in the $100 a barrel range, or slightly below.
As such, he said the surging shale oil production in Texas will need to go to the open market. Oil demand is not growing much in the U.S., and most American refineries rely on heavier crude.
Lance said he just returned from Washington, D.C., where he discussed the crude export ban with federal and congressional officials.
“Today we can export products, gasoline and diesel. We should be exporting crude into the open market,” Lance said. “That’ll reduce the global price of crude and give us the best chance to reduce gasoline prices for the consumers. We have a great refining system, but that refining system in the U.S. today is not designed to necessarily handle the volumes of light sweet crude that we’re going to be producing in the United States.”
While this issue may not be an immediate crisis, Lance said problems are looming.
“We’re going to run headlong into the oil export issue,” he added. “A growing volume of light sweet crude that we can’t refine and has no place to go — we’re going to have to deal with that. Prices will get discounted if it doesn’t go anywhere. Rigs will shut down, and growth will slow down if we don’t deal with that over the coming years.”
In June, the federal government allowed two Texas companies to start exporting condensate, which was interpreted by some as a sign that the administration is loosening its stance on the crude export ban.
This article was provided by the Houston Business Journal, you can view the original here