COMPROMISE IS KEY
Energy sector wins big — when bipartisanship works.
We are living in partisan times.
As I type this story, members of the U.S. House of Representatives are speaking one by one on whether they favor impeaching President Donald Trump for his conduct in the Ukraine scandal.
Congress has become polarized, but it wasn’t always that way.
Four years ago, President Barack Obama signed a bipartisan budget bill that also lifted a four-decade ban on U.S. crude oil exports. I remember that day well. It was Dec. 18, 2015, and I was traveling in Hong Kong where the news made the front page of the South China Morning Post.
Over a healthy breakfast that included a couple of cups of coffee, some dumplings and a Chinese rice porridge known as congee, I read how Obama ended the Arab Oil Embargo-era ban with the stroke of a pen. The bill passed thanks to something that is rare in Congress these days — a compromise. Crude oil exports were traded in favor of extending tax credits for renewable energy sources such as wind and solar.
Four years later, the results of that bipartisan bill are clear. The entire energy industry benefited to the tune of billions of dollars from that signing of that bill.
At the time the bill was signed, I worked as a reporter in San Antonio covering both the Eagle Ford Shale of South Texas and the renewables industry. Less than two weeks after the bill was signed, the first U.S. crude export shipment left from the Port of Corpus Christi.
Houston oil major ConocoPhillips landed a contract with Swiss trading company Vitol to supply of a shipment of crude oil from one its Eagle Ford wells to a customer in Europe. With the crude oil moved via pipeline, a Bahamas-flagged tanker named the Theo T left NuStar Energy’s Corpus Christi terminal on New Year’s Eve 2015 and arrived in Marseilles, France on Jan. 20, 2016.
A Malta-flagged tanker named the Seaqueen left the Enterprise Product Partners terminal at the Port of Houston with a shipment of crude oil on New Year's Day 2016 and made it to Rotterdam in The Netherlands on Jan. 21, 2016.
Export powerhouse
Subsequent export shipments paved the way for U.S. crude oil production to grow to nearly 12.5 millions of barrels per day and to become an export powerhouse. With most domestic refineries unable to process the light sweet crude from U.S. shale plays, the most lucrative markets for that oil have always been overseas. The United States now exports 3.1 million barrels of crude oil per day, which at $55 per barrel are worth a combined $170 million per day or $62 billion per year.
On the renewables side, the tax credits allowed the adoption of wind and solar to grow exponentially.
Earlier this month, the United States reached a milestone of 100 gigawatts of installed wind energy capacity, with more than half of that installed over the past seven years, according to the Department of Energy. One gigawatt provides enough power for about 700,000 homes. Texas accounted for more than a quarter of that wind generation capacity.
Wind energy has since displaced coal as the No. 2 power source behind natural gas. That shift has come with savings to Texas consumers and allowed them to buy retail power plans that provide 100 percent of their electricity from renewables.
Even companies in the fossil fuel business are turning to renewables for their power. Occidental Petroleum, Exxon Mobil and Shell entered into power purchase agreements to get electricity for some of their facilities from renewables. Houston oil field services company Baker Hughes went one step further. The company signed a 10-year power-purchase agreement with the French company EDF Energy to get all the electricity for its 170 facilities in Texas from wind and solar farms.
When it comes to energy policy, bipartisanship and compromise have long-lasting and unexpected benefits in the market.