Valero Mexico Export Deal Seen as Step Toward 'World Dominance' in Energy

Texas Railroad Commissioner Ryan Sitton cites last week's announcement of a major deal by Valero Energy to export gasoline, diesel fuel and other refined products to Mexico as another step in the eventual dominance of the U.S. Energy industry, led by Texas globally, News RAdio 1200 WOAI reports.

"I think the opportunities for the United States to become the single most dominant energy force around the world is a definite reality," Sitton told News Radio 1200 WOAI. 

President Trump recently called for the U.S. not to achieve the energy independence that politicians have been demanding for more than forty years, but energy dominance, as the leading supplier of energy to the world, surpassing OPEC and Russia.

Sitton says Texas has the infrastructure needed to make that happen, from the pipelines to the ports, the refineries, and, above all, the rescources that will allow Texas to produce larger and larger quantities of oil and gas for decades to come.

He says that is why the Texas fracking fields of the Permian Basin and the Eagle Ford have remained strong, despite the depressed price of oil through much of 2017.

"People are investing here more than they are in other places around the world, so even at depressed prices, we are expecting more jobs, more development, more pipeline construction."

The Energy Information Administration is predicting U.S. production will reach 10 million barrels per day in 2018, a prediction Sitton expects will at least be reached, and may be surpassed, despite oil prices which still fall short of breaking through the $50 a barrel mark.

Analysts say one of the things that has kept the Texas fracking fields strong is the drillers' ability to make a profit at lower prices through technological innovation.  Many, for example, monitor the wells remotely using technology.

When fracking was introduced in 2008, when oil was selling for $140 a barrel, it was thought that the break even point for fracked oil would be $80, and it appeared at the time that was a figure which was not likely to be reached.

As prices fell, due largely to an increase in supply due to U.S. production, and several clumsy attempts by OPEC to drive frackers out of business, fracking companies quickly learned efficiencies that now allow some with favorable leasing situations to make money with world oil prices as low as $40.

Sitton says nothing but good can come from America's rise as the world's energy supplier. He says the U.S. can help free the world from dependence on bad actors from Russia to OPEC.

"The entire European bloc, which buys almost half of its natural gas from Russia, is looking at US natural gas, and asking 'how can we get that product into our market so we aren't so dependent'."

He also sees energy-hungry China as a potential purchaser of U.S. enrgy, along with Mexico and Europe, especially as China, with its notorious air pollution problem, turns to cleaner natural gas to meet emissions reduction targets.

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