The U.S. Energy Information Administration (EIA) reports that the average retail price for regular gasoline on Aug. 31 was $2.51 per gallon – the lowest price for the Monday before Labor Day since 2004 and 95 cents lower than the Monday before Labor Day last year. EIA’s chart:

EIA explains:

Declines in crude oil prices are the main driver behind falling U.S. gasoline prices. Lower crude oil prices reflect concerns about economic growth in emerging markets, expectations of higher oil exports from Iran, and continuing actual and expected growth in global crude oil inventories.

Certainly, the global markets for a variety of commodities may be influenced by concerns, feelings and inklings of one kind or another. Let’s focus on the tangible reason EIA cites for lower global crude prices – hence, lower prices at U.S. pumps: growth in global crude oil inventories. That refers to production and supply to the market. The story behind that story is that over the past six or seven years, the United States has led the world’s top suppliers of petroleum and other liquids in production and rate of production growth:

Two points: First, with lower gasoline prices here at home, American consumers are realizing one of the end results of surging domestic oil production that has reached levels not seen in 30 years. For that you can thank vast U.S. reserves of oil and natural gas in shale and other tight-rock formations that’s being safely unlocked through modern technologies and advanced hydraulic fracturing and horizontal drilling.

Also thank a modern, innovative energy industry that has invested in the technologies and know-how to harness America’s energy potential – creating jobs, economic growth and greater U.S. energy security along the way.

It’s not overstating it to say that we’re witnessing history, an energy renaissance that is changing the trajectory of American fortunes – our ability to secure our future while projecting positive influence in the world. In energy terms, the U.S. is stronger and more secure than it was just 10 years ago. API President and CEO Jack Gerard:

“Over the last decade, the energy landscape has undergone a transformational shift. American innovations in hydraulic fracturing and horizontal drilling have lifted our country out of decades of scarcity, while U.S. refineries have boosted efficiency and rapidly expanded their capacity to deliver affordable fuel to consumers. This surging American production has marginalized the ability of other nations to dictate prices and created vast new economic opportunities for U.S. workers and consumers.”

The second point is this: As we see and appreciate the benefits of this domestic energy resurgence, Americans should realize that this energy growth isn’t guaranteed to continue – not without the right leadership, policies and actions. We can choose a path that continues to harness domestic energy, or one that limits it. Gerard:

“… this unique American moment is not set in stone. It represents a crossroads, and our next president – as well as those who occupy Congress, governors and state legislators – will be called on to decide between two paths. We can pursue an American future of energy abundance, self-determination and global leadership or take a step back to an era of scarcity, dependence and uncertainty.”

To sustain and grow America’s energy revolution we need access to reserves (onshore and offshore), sound regulatory policies and licensing and permitting processes that avoid needlessly complicating and frustrating investment and development.

This approach also includes allowing U.S. crude oil exports, as well as natural gas. Participation in global energy markets is what energy superpowers do. The U.S. should lift its 1970s-era ban on crude exports and expedite approvals for liquefied natural gas export facilities so that American energy can positively influence global markets while spurring domestic production. Study after study, including a new one this week from EIA, say that U.S. crude exports would benefit U.S. consumers. Gerard:

“We got to this era of energy abundance and global energy leadership because of the entrepreneurial spirit of the private sector, the hard work of the American worker and the unique system of private property and individual rights of the American marketplace. To continue this progress we should be mindful that these advances could easily be stalled or even reversed without forward-looking energy policies that encourage safe and responsible domestic energy development and production, that support a robust refining sector, and embrace our nation’s bright energy future.”

The lowest prices at the pump in more than a decade are largely the result of an amply supplied global crude oil market, which has lowered costs there and exerted downward pressure on gasoline prices here at home. Robust domestic energy development is an important factor in the overall equation. Keeping it going is the way to seize a generational opportunity to make our economy and energy future more secure.

By Mark Green

Originally posted September 4, 2015

Energy Tomorrow is brought to you by the American Petroleum Institute (API), which is the only national trade association that represents all aspects of America’s oil and natural gas industry. Our more than 500 corporate members, from the largest major oil company to the smallest of independents, come from all segments of the industry. They are producers, refiners, suppliers, pipeline operators and marine transporters, as well as service and supply companies that support all segments of the industry.