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US not producing enough oil for prices to be lowered

The International Energy Agency’s energy markets and security director has testified before the Senate Energy and Natural Resources Committee that the US alone cannot ramp up production enough to have a significant effect on oil prices.

The official, Keisuke Sadamori, also said the country would have to depend on OPEC to deliver its promised output increase because of US pipeline constraints. While shale players like ExxonMobil, the oil major behind Mobil UK stockists, may be able to grow production, the current infrastructure limits their ability to get it to consumers. Speaking about this, he said:

“The pipeline takeaway capacity is preventing further growth in the short term. It is really hard to expect U.S. production to grow significantly until pipeline takeaway issues are resolved.”

New pipelines are in the works, but they are not expected be introduced this year, with a new one in Texas set to come online in 2019.

There appeared to some frustration on the committee that even with the US producing over 11 million barrels per day, OPEC can still effectively set the price at the pump by changing its members’ levels of production. The lead democrat on the committee, Sen. Maria Cantwell, suggested that maybe the only way to take control of oil prices would be to lessen the country’s demand for oil through tough fuel-efficiency standards and investment in electric vehicles. She added:

“It is clear that we cannot drill our way out of this problem.”

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