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Hoeven: U.S. fighting for oil dominance

North Dakota senator puts oil on similar footing as U.S. military for foreign policy leverage.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   Jan. 11, 2016 at 8:33 AM
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WASHINGTON, Jan. 11 (UPI) -- The United States is engaged in battle with global producers to see who can ensure the future demand for crude oil, a Republican senator from North Dakota said.

U.S. Sen. John Hoeven, R-N.D., said robust production policies from members of the Organization of Petroleum Exporting Countries were curbing the potential of U.S. producers because higher output means lower crude oil prices.

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"OPEC is fighting to defend their market share and exert their historical dominance over oil markets and energy prices," he said in a statement. "They're actually working to undermine our energy industry."

Crude oil prices are off 70 percent from the 2014 peak of $107.95 per barrel for West Texas Intermediate crude oil, the U.S. benchmark price, as supplies far outweigh demand. That's left energy companies with less capital to invest, though U.S. production figures have yet to reflect the pressure from lower crude oil prices.

WTI held a rare premium over Brent, the global benchmark, after the U.S. government in late December erased a 40-year-old ban on crude oil exports. Hoeven, a longtime advocate of lifting the ban, said the United States was looking to take the pole energy position on the global stage.

"Make no mistake, we are locked in a global battle to determine who will produce oil and gas in the world in the future," he said in a weekend address. "Will it be OPEC? Russia? Countries like Venezuela? Or will it be us, the United States."

The United States passed Saudi Arabia as the top net oil producer in 2014. Under pressure from lower crude oil prices and weaker demand, U.S. crude oil production is expected to decline through the end of the decade. Demand, meanwhile, is expected to start returning to balance with supply during the latter half of 2016.

For Hoeven, U.S. oil dominance could be a foreign policy tool. By reaching foreign markets, U.S. oil can contain adversaries like Russia while bringing stimulus to U.S. consumers in the form of lower retail gasoline prices.

"Low-cost energy makes us more competitive in the global economy across the board -- in all industry sectors," he said in the weekly address from the Republican Party.

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