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Below are highlights from a testimony given by John Kingston, President, McGraw Hill Financial Global Institute before the US House of Representatives Energy & Commerce Committee Subcommittee on Energy & Power hearing on 黑料社�21st Century Energy Markets: How the Changing Dynamics of World Energy Markets Affect our Economy and Energy Security.黑料社�

Oil

黑料社淭he amount of capacity that is on the sidelines because of political issues is staggering. One recent estimate put it at 4.5 million bpd. It starts with small countries like the South Sudan and Syria, and rises up to outages close to 1 million bpd in Iran and Libya. And this does not even take into account that political mismanagement of a country黑料社檚 industry can and sometimes has given it a productive capacity far less than what it should be. If there was any sort of significant move toward quiet in these areas, since the costs of production in most of these regions are all significantly less than in the US, oil prices would come under even greater pressure.

黑料社淭hat said, while there are global factors contributing to the drop in oil prices, none compare to the scale of what the US shale revolution has done in just a few short years.黑料社�

Gas

黑料社淲hen talking about US competitiveness on energy, it黑料社檚 important not to forget that natural gas is what gives the US an enormous edge. Because, it黑料社檚 a pipeline delivered product, it is only slightly part of a global market. LNG shipments are not enough to tie it fully to other markets. So you first had natural gas break away from its loose correlation with oil back in 2009, and, even with the fall in oil recently, that relationship remains at a level that makes natural gas consumption in the US far more competitive than gas consumption in the rest of the world.

黑料社淢ost important to note today is the duration of this revolution: six years and counting. In terms of economic transformation, six years is just a warm up. The changes in the US resulting from these added flows have just begun.黑料社�

Exports

黑料社淎s far as how US crudes would fare abroad if they were allowed to be exported, it黑料社檚 safe to say that some refiners probably have models, but they aren黑料社檛 widely distributed. The rise in US crude oil exports to Canada, mostly via rail, indicates that Canadian refineries are finding US crudes to be attractive. If they weren黑料社檛, export numbers would be falling, not rising. But a cautionary tale lies in the effort in the late 90s to lift the ban on exporting Alaskan North Slope (ANS) crude to Asia. That battle went on for several years, and, finally, the ban was lifted. Asian refiners processed ANS crude for a few months, and simply did not find it competitive. So if you look at the export data, you see this surge in exports that last for a few months, and then it drops back toward zero.黑料社�

黑料社淯ltimately, a free market finds the best locations for any commodity to be consumed. So if a ban is lifted and US crude doesn黑料社檛 go anywhere, that黑料社檚 probably a signal from the market that the rest of the world is better off consuming non-US crudes. But the fact that the crude can be exported will help make a more competitive market. It黑料社檚 always out there as, at least, a potential source of supply.黑料社�

Jobs

黑料社淭he oil and gas extraction industry showed job losses of 2000 for the month of January. This was the highest monthly loss since the recession. Moreover, regions that are heavily reliant on the energy sector could see a greater negative impact on employment and their surrounding economies.黑料社�

黑料社淗owever, the oil and gas sector, by itself, only represents 200 000 US jobs. This is just 0.14% of the 140 million jobs in the US economy. Energy capital expenditures of US$183 billion equal roughly just 1% of the US黑料社檚 US$17.6 trillion GDP. And while the impact of oil prices will differ based on a region黑料社檚 concentration, and the oil and gas industry黑料社檚 supply chain, low oil prices, in the near term, is a boon for the overall economy, according to a recent report by S&P黑料社檚 US Chief Economist, Beth Ann Bovino, and her US economist Satyam Panday.黑料社�

Edited from testimony by

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