Answering Your Energy Questions

Speaker A: Uh,

Speaker B: hello, Texas, and welcome to a candid conversation about what powers modern life. If you're looking for facts about our energy landscape and how oil and natural gas provides energy security for our state, nation, and allies around the globe, you've come to the right place. This is TXOGA Talks, where energy meets insight. Welcome back to Tex Hoga Talks, a podcast brought to you by the Texas Oil and Gas Association. I'm Todd Stables, your host today. And today, what I really hope to do is spend some time answering questions that I believe are on the minds of every single consumer. And I'd like to talk directly to the people that are listening, who you may not work in oil and gas. You may not own mineral rights. You may not even think much about the energy industry unless you're filling up your truck or your car, you're paying your electric bill, or you're watching another war break out somewhere around the world. Whether we realize it or not, Texas oil and natural gas affects our lives every single day. And right now, voters have legitimate questions about some things that they're experiencing. Questions like, why is gasoline expensive? If America produces so much oil, why are we exporting energy overseas while families here are struggling with cost? Why are wars in Iran and Ukraine affecting what Texans pay at the pump? Or why does natural gas stay relatively affordable even though exports are booming? And maybe, just maybe, the biggest question of all that some may have is, does Texas oil and gas still matter in the modern economy? The answer is yes, and probably more than ever. But this conversation that we're having today, and it's something that you deserve, you deserve more nuance than slogans. Because reality is, it's not a mere slogan that energy security is national security, economic security, or kitchen, uh, table security. What you're experiencing today is that as energy prices spike, everything gets more expensive. Groceries, transportation, fertilizer, manufacturing, housing, airline tickets, electricity. All of it. And Texas really does sit at the center of that system. Texas is still the number one oil and natural gas producing state in America. The state produces roughly 43% of all U.S. crude oil and about 30% of of U.S. natural gas production. Texas has the largest refining system in the country, with about one third of total U.S. refining capacity. That means that Texas is not just producing energy. Texas is helping power the American economy. And so today, I want to break down what voters need to understand about energy, about prices, about exports, about national security, and why this industry still matters deeply to every resident of this great state. So one of the things to get started that sometimes gets lost in political conversations that we have. And that is this. Oil and gas is not just an industry, it's infrastructure. I mean, think about it. People flip on a light switch and they expect electricity. They expect affordable groceries. They demand that ambulances run. They expect airplanes to fly, and they expect packages, whether it's from FedEx or UPS or Amazon, to arrive the very next day. And this only happens, ladies and gentlemen, because energy is abundant and it's reliable. And Texas provides a massive share of that reliability. Just think about it. The Permian basin alone has become one of the most productive oil regions in the entire world. And when you combine the Permian with the Eagle Ford Shale in South Texas and the Haynesville basins in East Texas, then what you have is Texas dominating domestic production. And because of hydraulic fracturing and horizontal drilling, the United States, from worrying about energy shortages just 15 years ago to becoming the world's leading oil producer. That matters geopolitically. And here's why. Because every barrel produced in Texas is a barrel the world does not have to rely upon from a hostile or unstable region. And just look at what's happening globally right now. You have instability involving Iran and threats around the Strait of Hormuz war, one of the most critical oil shipping checkpoints on the entire planet. You still have the war in Ukraine affecting global energy flows. And when geopolitical tensions rise, global oil markets react immediately because of energy markets that are so interconnected. And that's why Texans can feel the effects of military conflict thousands of miles away and sometimes feel it instantly. Because, you see, oil is priced globally. And one of the hardest things for voters to sometimes understand is that very phenomenon, that it's a global marketplace. People ask, uh, sometimes if Texas produces so much oil, why are gas prices still high? And it's because gasoline prices are not determined only by local supply. So here are some factors that influence global oil prices. Global crude oil prices, refinery capacity, transportation costs, seasonal blends, uh, geopolitical instability, and of course, supply disruptions anywhere and all over the world. And you see, when markets worry that global oil supply could tighten, prices rise almost instantly because there are thousands of of individuals that are trading oil on a day to day, minute by minute, hour by hour basis. And they have to react to what they're seeing and what they're hearing. And that's exactly what we've experienced because of the instability involving Iran that has effectively closed off such a major shipping route. Now, to answer and tackle another question that consumers are asking. Obviously, if you're filling up at the pump, you're Asking, why is gasoline so expensive? Well, first of all, crude oil itself is the biggest component of gasoline prices. We know this. But when oil prices rise globally, gasoline usually follows. The second is because refining does matter. A lot of Americans don't realize that producing crude oil and turning it into the gasoline that we depend upon are really two different processes altogether. Texas has the largest refining system in America, and this is incredibly important. But refining capacity nationwide has been tight for years. And so when you have periods of high demand or geopolitical instability, refineries run near full utilization. And so in the recent periods, Gulf coast refineries have operated above 95%. And so this leaves very little margin for disruption. So when a refinery goes offline because of maintenance hurricanes or supply issues, gasoline and diesel prices can jump quickly. Uh, and there's another factor, a third one here that we also need to think about, is that the type of crude matters. You see, the United States produces a lot, a great deal of light, sweet crude oil. And this is from shale plays like is in the Permian. But many US Refineries were originally designated decades ago to process heavier imported crudes. And so that's one of the reasons that America imports and exports oil at the same time, to have that blend of heavier oils and lighter oils. And this is where consumers can sometimes get frustrated. Another question we often hear is, what about the Strategic Oil Reserve? We thought that was supposed to, uh, be something to protect our country from price swings. Uh, that's a great question, and it's one that deserves a real candid conversation. You see, there's both private storage and there's public storage. Uh, companies, terminals, pipelines, not only in Texas, in the United States, but across the globe, all use storage as a balancing act because they'll have a lot of production online. Until that product is taken to a refinery or moved into a ship, you have to have volumes of storage. The same is true of our Strategic Petroleum Reserve, which is funded by our federal government and managed by the federal government. And so traders are looking at the available of storage, both public storage and private storage, on an ongoing real time basis. And beginning at the first of this year, storage was pretty high of oil and natural gas. And, and as the Strait of Hormuz has been closed now for a while, and they've, you know, users and traders have been relying on that crude, uh, oil that's been in storage. And so you've had a drawdown and you've seen that our president has worked with other countries across the globe that also have SPRs in their countries. And they've coordinated strategic drawdowns of this reserve so that they would have that available supply of, uh, to meet whatever the demands are for that crude oil. The same is true of natural gas. We have. There's not government storage of natural gas, but we have privately funded natural gas storage that acts as that balancing act. And so the longer that this conflict occurs, both in Russia and in the Gulf states in the Middle east, you're seeing a continual drawdown of that product. And that's another factor that has been influencing prices, uh, as traders look to meet their needs on a daily basis. Well, why are we exporting, uh, if gas prices are so high? And the answer is because energy markets are global and our refining system, as we've discussed, is complex. You see, exporting US Crude actually helps stabilize global supply and can reduce price spikes internationally, which eventually benefits American consumers as well as. And remember this, if America suddenly stopped exporting oil entirely, it would not magically create cheaper gasoline overnight. In fact, experts say it could create market disruptions and actually hurt domestic production incentives. Now, there's another point to, uh, consider and that consumers need to just have a real candid conversation about. No matter what you might hear, oil companies do not control global oil prices. No Texas producer can wake up tomorrow and decide oil will be higher or lower. And let me give you a real quick statistic. There's about 105 million barrels of oil a day of global demand for oil, and the United states produces about 13.6 million barrels. And so we are a significant producer of. But we certainly are not the dominant producer globally, and therefore we don't have the ability to influence those prices. But that's why wars and instability matter so much when markets fear disruptions near places like the Strait of Hormuz, where almost 20% of the global oil and refined product move every day, not to mention natural gas prices rise almost immediately. Now, we've covered a lot of ground. I need to take a quick break to hear from our sponsor, but stay with me because coming up next, I want to answer the question about natural gas and the amount of natural gas that we're exporting and what this means to Americans. We'll be right back.

Speaker C: Hi, I'm Neal Carlton, president of the Texioga Insurance Agency. The Texioga Insurance Agency is pleased to sponsor today's episode of the Texel Garment Talks podcast. TXOGA members have access to the Texoga Safety Group with Texas Mutual and get a premium discount of 12.4%, as well as the possibility to earn two dividends. Participants also have access to unique safety tools to keep their team safe and on the job. Visit texokai insurance.com for more information.

Speaker B: And welcome back to Tex OGA Talks, where we're taking head on questions today that we've heard from voters and consumers across Texas. And some of these questions are ones that everyday families are thinking about, like why voters should care about Texas energy, why gasoline prices are so high, why natural gas prices have stayed lower. And I want to get into the environmental questions and I've got a good rapid, uh, roundtable type way to close today's episode. So I'm glad that you're with us. And today we're going to move into and answer a question that there's been a lot of thought around. And that question is this. If we are exporting, uh, record amounts of natural gas, why are natural gas prices still relatively affordable in the United States? And that's actually one of the biggest questions that uh, has been one of the biggest things success stories in American energy. And the short answer is America, especially Texas, produces an enormous amount of natural gas. Shale development has dramatically increased domestic supply over the last 15 years. And in fact, associated gas production from oil drilling in places like the Permian Basin has kept supplies very robust. We also have found, uh, more natural gas deposits in South Texas. And obviously there in East Texas, it's uh, mainly a natural gas play. Right now we know that the associated gas production from oil drilling in places like the Permian Basin has just been one of the big, big factors. And even if you think about it, even with LNG exports growing rapidly, domestic production has remained extremely strong. The EIA recently forecast US natural gas exports to grow nearly 30% by 2027 as LNG facilities continue ramping up capacity. And then our economy has benefited because we've had more pipelines being built to move that product to areas in need around Texas, around our country, and then to meet the needs of our allies across the globe by building to these LNG facilities. Now, at the same time, the United States is producing enough natural gas to keep domestic storage relatively healthy and to meet and to far exceed the domestic demand that we have. And this all matters tremendously for consumers because affordable natural gas has done a lot of things. It's helped lower electricity cost. It supported a renaissance of domestic manufacturing, which means US Made products and US Jobs. It's reduced emissions significantly. And it has done one thing that I'm very proud of. It strengthened American energy independence. And so here's another thing, though. I think that, uh, uh, all Americans should really be proud of and the fact that we're in these political geopolitical crises around the globe today, and that is that American LNG exports or helping our allies overseas. Europe, uh, became heavily dependent on Russian natural gas for years after Russia invaded Ukraine. Europe needed alternative supply quickly. I just met with the US Japan Chamber and talked about the growing demand from Japan, uh, that is being met by Texas and US lng. And the reality is the United States and especially Texas lng infrastructure investment in Texas and jobs in Texas have become critically important to our state's economy, our, uh, nation's economy, and the global stability. Folks, that's not just economics. That's national security. And now with the instability affecting Middle East LNG supply as well, American LNG has become even more important globally. So when people hear about LNG exports, they should understand that Texas natural gas is helping keep allies powered and reducing dependence on adversarial nations. And thanks to the ingenuity of Texas producers, there's plenty of natural gas supply available for us to use right here at home. Now, today we spent a good bit of time talking about security. We've talked about economics. But I think it's important that we also speak candidly about the environmental side of this conversation, because we know that polling indicates that certain demographics, particularly younger voters, sometimes rank environmental concerns higher than economic goals. They care deeply about environmental stewardship, and frankly, they should clean, uh, air matters. Clean water matters. Safety matters. And the good news is Texas oil and gas technology has improved dramatically. The industry today is not the industry of 40 years ago or 50 years ago or even 30 years ago. Methane monitoring has improved significantly. Leak detection and repair techniques have improved. Water recycling and reuse has improved. Emissions intensity has improved. And folks, this is just the beginning. Innovation in technology is leading the way to making important environmental gains, all while producing more. And one of the most important environmental stories in the world over the last two decades has been, uh, the rise of reliable and lower emissions, natural gas and electricity generation. Electricity generation and transmission have been top of mind for Texas legislators that are in the Capitol behind me today for our Texas regulators. And they're making important decisions to ensure that consumers have all that they need in terms of getting the power to where it's needed and, and having the amount of power that's necessary available. And I'm glad to say that natural gas has helped reduce US Carbon emissions significantly. Because of its use in power generation, natural gas is still the backbone of the Texas energy grid. But here's something that we need to have that candid conversation about. Every form of energy has trade offs. Wind, solar, nuclear, oil, natural gas. All of them involve land use, materials, infrastructure, uh, transportation to market, as well as environmental considerations. And voters deserve a balanced conversation rather than an ideological one. Because the reality is modern life still requires enormous amounts of of reliable energy. And today, because there are no large scale alternatives that can deliver the reliability and affordability consistently, oil and natural gas remains essential. It's essential for transportation, for aviation, petrochemicals, that makes all the products that we use every day. Manufacturing, domestic manufacturing that's occurring here in America. Heavy industry, agriculture depends very much on oil and natural gas and certainly, as we have discussed, grid reliability. I hope these conversations about, uh, affordability and availability and supply and exports have been useful to you today. Texas oil and natural gas are not perfect industries, no industry is. But they remain absolutely essential to modern life and to American strength. And they're doing the job better each and every day. That's why we have TexHoga talks, because voters deserve a serious conversation based on facts, economics, sound science and national security, not just slogans. Because when Texas energy succeeds, it supports jobs, it strengthens communities, it powers the economy, and and it helps keep America strong. If you enjoyed this episode, share it with someone who may not follow energy issues as closely as you and I. Because whether people realize it or not, energy policy affects every single household in America. If you'd like to hear about topics that we haven't covered, please send us a Note. Go to texoga.org we'd love to hear from you. I hope you'll join me again next time for another episode of texhoga Talks where energy meets inside the views expressed

Speaker D: on this podcast are not intended and should not be construed to be the views of any particular Texoga member or company. The purpose of this podcast is to engage in candid conversations about energy needs, energy security, and the future of energy.