Daily Reflector | May 5, 2016 | John Brodman
The Obama administration’s decision to remove the Mid-Atlantic region from its offshore oil and gas program was not unexpected but it will have consequences, and the issue is certain to return. While the McCrory administration works toward energy independence through its all-of-the-above energy strategy, Obama has kicked the can down the road for another five years.
Given the forces unleashed by nearly two years of declining oil prices and the cutbacks underway in the global oil and gas industry, the stage is being set for another run-up in oil prices similar to what we have witnessed many times in the past. As Yogi Berra famously said, “It’s like déjà vu all over again”.
Market dynamics was cited as a key factor in the decision. It’s true current market conditions are soft, but how long will they stay that way? Given all the factors involved, we can’t say definitively where oil prices will be in five or 10 years, but they are likely to be higher than today. The longer oil prices remain low, the greater the risk of a large price increase in the future. A return to $85 a barrel oil would cost American consumers $385 billion per year in higher oil costs, with associated impacts on income and growth.
Read the full editorial here.
John Brodman is a retired Deputy Assistant Secretary for International Energy Policy at the U.S. Department of Energy. He is currently a member of Gov. Pat McCrory’s Energy Policy Council.