The recent rise in U.S. crude oil prices due to the announcedproduction cuts by the Organization of Petroleum ExportingCountries (OPEC) shouldn’t stop Congress from pursuing legislativereforms for domestic oil and natural gas producers, the head of anindependent producer association said yesterday.
“Certainly some people look at that [price rise] and say ‘wellyour problem is solved because OPEC’s going to announce reductioncuts.’ We support restraint from the suppliers of oil around theworld. The problem is that even after the announced cuts, the priceof oil is still at about $14 a barrel. That translates into pricesin the field from about $8 to $12 a barrel,” said George Yates,chairman of the Independent Petroleum Association of America(IPAA).
“When you see it at $17 or $18 and headed north, you know thatthe oil industry can start getting back to work. The price [impact]as a result of the OPEC announcement is still extremely low. OPECstill does not seem to have any credibility in the market. And weare not going to let that be used as an argument against majorlegislative reform,” he told reporters during a press conference onCapitol Hill. The price of West Texas Intermediate crude has inchedabove the $15 mark.
The briefing was held as part of IPAA’s “Crude AwakeningCampaign,” during which it presented lawmakers with a “Oil PriceCrisis Relief Resolution” signed by more than 50,000 producersurging the White House and Congress to approve tax initiatives,marginal well credits and other types of economic reforms to liftoil and natural gas producers from their currently depressed state.
A number of Senate and House lawmakers – Senate Energy CommitteeChairman Frank Murkowski (R-AK), Sen. Pete Bingaman (D-NM), Reps.Wes Watkins (R-OK), Kay Granger (R-TX) and Lamar Smith (R-TX), toname a few – dropped by the briefing to show their support forindependent producers. “The oil industry…has lost almost 50,000jobs since the price collapse began in November 1997. Why isn’t theWhite House supporting them and why isn’t Congress passing taxincentives and relief for the domestic oil and gas industry?” askedSmith, who added it was long “overdue.”
Independent producers and lawmakers called on the federalgovernment to offer price support to the oil and gas industrysimilar to that which already has been extended to the domesticsteel and agriculture industries. IPAA’s Yates emphasized that therelief was being sought for both oil and gas. “This is not an oilindustry and separately a gas industry.”
He noted the industry shrunk 15% last year in terms of jobs, andthat production was down 8% in one year, or 565,000 barrels/day.”We’re [being] called upon by the administration in the nextseveral years…to meet a tremendous growth in demand for naturalgas. That’s going to be very difficult to do as that [production]infrastructure erodes.”
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