U.S. President Donald Trump touted America's energy independence and vowed that the oil industry will never again be reliant on hostile foreign suppliers in a speech in Midland, Texas.
"We're also here to send a clear message to the zealots, radicals, and extremists trying to shut down your industry and to make America subservient to foreign producers. That won't happen to this nation again," President Trump said in the speech that was part campaign speech and part an attempt at a morale boost to the Permian basin producers and workers who have seen the worst of the oil price and demand crash in recent months.
"We will never again be reliant on hostile foreign suppliers. We will defend your jobs, and we will defend the Lone Star State," President Trump said, announcing some immediate actions to boost American energy.
One is that export authorizations for American liquefied natural gas (LNG) can now be extended through 2050. President Trump also signed four permits approving pipeline and railway infrastructure between Texas and Mexico.
"This will include two permits allowing the export of Texas crude to Mexico - a giant victory for the workers of this state that you've been after for many years," President Trump said.
The President also thanked Saudi Arabia, Russia, and OPEC+ for coming together to cut 9.7 million bpd of their combined production in May and June and for stabilizing oil prices.
"This action stabilized world oil prices that had been in a freefall, and saved millions of energy jobs, and frankly, it saved your industry. Four months ago, people were very, very concerned about that industry. And now it's just going to be a question of how fast will you put people on," President Trump said.
Producers in the Permian have been reeling from the oil price crash, and bankruptcies have been mounting in recent weeks.
Earlier this month, the Odessa Development Corporation (ODC) launched 'The Permian Fuels America' task force to protect the U.S. industry from oil market manipulation initiated by other countries, convince refiners to buy American oil, and retain the oil workers during this downturn.
Tsvetana Paraskova for Oilprice.com
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Comments
Even when US Energy Information Administration (EIA) was claiming a US oil production of 13 million barrels a day (mbd) before the pandemic, the US hasn’t been able to achieve energy dominance and oil self-sufficiency.
Since its inception in 2008, the US shale oil industry has been torn apart by geopolitics and economics. The geopolitics has seen the United States talking of energy dominance and oil self-sufficiency.
The US shale industry could have been far less unprofitable if only it put aside dreams of energy dominance and concentrated on profitability. But this was never to be with the industry producing recklessly and excessively to achieve geopolitical gains at the expense of economics.
As a result, US oil production will be struggling this year and the following years to even produce 6-7 mbd leading to a rise in US crude oil imports from 9 mbd in 2019 to 12-13 mbd this year and the coming years. The pandemic has shattered for ever any delusions about US energy dominance.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London