API economist touts low US energy costs, calls for reduced regulations

API chief economist John Felmy told reporters during a Friday press conference that while US energy costs are down, more can be done from the nation to help its consumers.

His remarks were as follows:

“The recent surge in domestic energy production on state and private lands―brought about by hydraulic fracturing and horizontal drilling―has helped put downward pressure on prices for gasoline, diesel and natural gas. But production on federal lands―where the administration has control―has fallen dramatically," said Felmy.

“US Gasoline prices are $3.22/gal today as we approach the Thanksgiving week, according to AAA. After falling for much of the summer and fall, prices have recently been pushed up by increases in world crude oil prices and rising US demand.”

“However, the US Energy Information Administration’s latest driving season forecast projects that gasoline and diesel prices will hold steady through at least the first half of 2014 (STEO, November 13, 2013).”

“US refineries continue to produce record amounts of gasoline. In fact, API’s monthly petroleum statistics, being released today, show that refineries produced a record amount of gasoline and distillate year to date.”

“With the right government policies that open up federal lands and waters for responsible development while speeding up the permitting process, we can do more to help consumers. Increasing oil production would add supplies that could help put additional downward pressure on gasoline prices. And it would mean more jobs and more revenue to our government to help pay for education and hospitals.”

“We also have concerns that government regulations threaten to increase costs. One major concern is ever increasing biofuel mandates under the Renewable Fuel Standard. These mandates could drive up gasoline costs by 30% and the cost of diesel by 300% by 2015, according to a study by NERA. EPA’s recent proposal to trim next year’s mandate is a welcome stopgap, but ultimately Congress must repeal these ever increasing biofuels mandates to protect consumers in the long run.

“Also, duplicative new federal regulations being considered for natural gas and hydraulic fracturing could jeopardize the shale energy revolution. States are already regulating effectively; adding another layer of regulation is unnecessary and counterproductive. . .”

“The good news is that energy costs are for the most part down. But there are specific policy changes the administration and Congress should make to help put downward pressure on prices. There are also small changes consumers can make that will save them over the course of a year.”