Joining us from new york this morning, antoine hope, hes a Senior Research scholar at columbia universitys center on Global Energy policy. Here to talk about oil prices. While were experiencing these tensions with iran. So, mr. Hope, lets begin with the history of the United States getting its oil from the middle east. Tell us about that. Right. Well, the volumes that are imported from the middle east have decreased dramatically in the last few years with the increase in election. But, in fact, the middle east has never accounted for very dramatic share of u. S. Imports. There was a time when there were significant imports from saudi arabia, from kuwait. The reason why the u. S. Has been playing the key role in keeping the shipping lanes safe in the gulf is not all about imports into its own country, its about the stability of the market as a whole. What is how is the market handling u. S. And iran tensions . Its been quite remarkable. There hasnt been much of a reaction. There was a kneejerk reaction right after the assassination of soleimani and there was another spike after the retaliation, the strikes by iran into iraqi air base that housed u. S. Troops. But the kneejerk reaction was very short lived. The market calmed down and ended up even lower than it had started. This is the second time we see this happen. Back in september of last year, the saudis, processing facility, was targeted presumably by iran. This is the larger such facility in the world. It was a major disruption. Very shortly major hit to saudi supplies. Half of saudi and the market took it in stride. The second time it happened. Seismic events in the middle east, things that in the past would have caused prices to jump and created a bit of a shock, today not much of a reaction. And you said u. S. Is concerned about the stability of the oil market and that is why u. S. Gets involved when keeping the shipping lanes open out of the middle east. Has been historically, yes. Historically. Yes, historically, thats been the case. Now what were hearing from washington are very different sound bites, we shouldnt be there, maybe we dont need to worry about the gulf oil, we dont need it in the u. S. And i think the saudis and other producers in the region are getting concerned that the u. S. Doesnt have their back in the event of another confrontation. Lets show our viewers when youre talking about the shipping lanes, the strait of horm hormuz. Right. And where saudi arabia and iran and qatar and uae and oman, look where theyre all located as they try to export their oil supply. According to fox business, an average of 21 Million Barrels or 21 of Global Supply pass through the straits strait, each day. Talk about that area. Right. No, this is a major chokepoint. This is a major pathway for World Energy Supply and you just talked about the oil. Theres also gas that goes through the strait of hormuz and energy from qatar. So its a very significant source of energy for the world. Its still not its still meaningful for the u. S. But its very significant for asian markets, asian asia, south northeast asia is the backyard of producers and the region really gets much of its Energy Supply from the gulf. So for china, for japan, for korea, other countries in the region, the strait of hormuz and the gulf in general are really vital areas. It makes it all the more all the more remarkable that the markets were so quiet. I think theres clearly a great deal of complacency on the part of the market. On two counts. I think theres an expectation that weve seen most of the escalati escalation, that the competition is now deescalating so theres a sense of comfort. Theres a sense of the rise of shale production in the u. S. Has really enabled the u. S. Market to absorb any disruption outside of the country. Where are these both expectations probably wont. And where are you mention these countries that are getting their oil and gas from the middle east. Which countries are they getting it from . So they the numberone exporter is, of course, saudi arabia. Then you have exports from kuwait, exports from the uae, going almost entirely to northeast asia, japan, particularly. Iran, of course, a fairly large producer large exporter until it was hit by sanctioned. It was hit by sanctions twice under the obama administration, the negotiation, agreement of the jcpoa. Again be i the truy the trump administration, november two years ago. The escalation in may when washington removed the sanctions waivers that allowed some countries keep importing at lower levels than in the past, still at significant levels. Since may, exports by iran have been a trickle compared to what they used to be. By comparison, you said saudi arabia is the largest producer. Youre talking about 12 Million Barrels a day according to forbes versus 4. 7 million for iran. 4. 6 for iraq. Uae around 4 million. Kuwait, 3 million. Qatar, almost 2 million. Correct. Yeah. Except that iran is now at 2. 4 million, 2. 3 million production and probably be less than half a Million Barrels of exports. Because of what . Because of the sanctions . Right. So right. How does the United States oil and Gas Production factor into all of this . Where are we exporting to . So, u. S. Production has experienced the most dramatic increase ever seen in the history of the oil industry from a single country in a short amount of time. And the u. S. Today is the numberone producer in the world of oil, of gas. A lot of that production stays at home and is refined in domestic refineries. So essentially pushed back imports that used to come into the u. S. Are now heading to other markets. But increasingly, weve seen exports from the u. S. As well. Banking now in the millions of barrels a day. In the last few months we saw the u. S. Net exporters for the first time in many, many years. Net zero . Yeah. Positive exports. More exports than imports. Okay. And do we have how dependent are we on foreign oil and gas . So we remain dependent because not all of the oil we produce domestically is really wellsuited for u. S. Refining capacity. U. S. Refiners are really geared to process heavier grades than what we produce in the shale basins. So really to optimize the refining system, refiners to have to the oil industry, in general, has to export u. S. Production and import other barrels of a different quality. That makes the u. S. Very much tied to Global Markets, maybe independent on paper in the sense its becoming net posit e positive, net exporter, but, in fact, its very much connected to the Global Market. The other way in which the u. S. Is connected to the Global Market is prices. Prices are set at the international at the global level. So what u. S. Consumers pay at the pump for the gasoline really doesnt depend on the rise in u. S. Production. Its really set by the market in general as a whole. So which countries the u. S. Is very much exposed to yeah, i mean, the u. S. Is very much exposed to the risk of price shocks. Which countries are u. S. Dependent on for oil and gas . Well, theres a most of the imports really come from canada. So canada is a, of course, very close by exporter. Its an exporter of heavy oil which u. S. Refineries love because they have the deep capacity to extract a lot of value out of their barrels. Heavy oil is typically cheaper in the market than light oil, but u. S. Refineries have developed very sophisticated capacities that allows them to take those barrels and turn them into very highvalue products and gasoline and diesel and jet fuel. So thats where a lot of the imports are coming from t. Then you have imports from south america, mexico. We used to take a lot of oil from venezuela. That production has dwindled. Venezuela, of course, is also under sanctions. Then you somhave some imports f the rest of the world, west africa. Those barrels have largely been displaced by domestic production. All right. Lets get our viewers involved in this conversation. If you have questions, comments about oil and Gas Production in the United States, around the world, Antoine Halff here to take those questions. Democrats 2027488000. Republicans 20274880001. Independents, 2027488002. Brian, independent caller. Caller thanks. Served a lot of time over in the gulf an on the other side of yemen. Engagements now, you could not keep the straits open but turn it on its heads and block any oil from coming out of there. I also notice you keep bringing on this kirk leopold, former commander of the u. S. S. Cole. I served with admiral nyquist over there. I find it offensive we bring on that commander when he refueled and he news that was the most hostile port on this earth. So thank you very much. Okay, Antoine Halff, take his comments object bahrain. Bell, you knwell, you know,o that needs to be clarified, the risk is not about the closing of the strait of hormuz. The risk is of the potential hypothetical iranian strike on facilities in the region. And weve seen iran demonstrate this capacity to hit facilities in the region. The strike in december in saudi arabia is something nobody thought was possible. Iran demonstrated it was able to pierce Saudi Air Defenses and also to strike very tragically, very precisely, the facility. The strike was not devastating to the saudi capacity because it was pretty superficial that repairs would be dont very quickly. Saudi was able to restore capacity very, very rapidly and to minimize reshuffle, use of its own barrels. The capacity of iran to really strike at heart of the industry in the region has been demonstrated and i think thats a bigger concern than the closure of the strait of hormuz which would not benefit iran. It needs the strait, itself, to export barrels. Mary ellen, sarasota, florida. Democratic caller. Caller hi. I have a question. I do appreciate that President Trump is making our Country Energy selfsufficient. But i do wuonder why we havent built and expanded refineries in decades in the United States. We really need to have more refineries so we can process what we have and then also what percentage of oil and gas does europe and asia rely upon the middle east for . Okay. It seems to me theyre the ones that need the energy from the middle east. Not the United States. All right, mary ellen. Well take those questions. Right. You want me to answer that . Yes, please. I think its true that the u. S. Election has kept increasing under President Trump. Im not sure any president deserves the credit for that. Thats an increase that started years ago. Strult of inve its driven by economy incentives and private industry more than by the political leadership. Of course, this increase in production has been leveraged politically by the president but the increase, itself, is really driven by industrial economic processors more than political processors. In terms of the Refining Capacity, the u. S. Has a lot of Refining Capacity. In fact, the u. S. Is a major the largest exporter of Refined Products in the world. It has much more Refining Capacity it needs to process and meet its own domestic needs and investments in refineries are very expensive. Theres been a lot of investments in refining. Capacity recently to meet the new standards of the International Maritime organization which has set new benchmarks, new requirements for emissions from ships to the u. S. Refining industry is very wellpositioned internationally to compete against refineries in other regions, but theres really not much room for additional investments that increase crude Processing Capacity in the world. The economics not make sense so much. Well go to benjamin, westville, new jersey. Democratic caller. Caller oh, good morning. Thank you for taking my call. Good morning. Caller yeah, i think i think that here in america, i think too many of our citizens have lost track of whats really behind this iranian issue. And i think i think its less the issue of conduct of iran than it is more so our conduct in the last few years. Remember, go back to the years when british pet tole yum controlled the oil fields in iran. And, you know, they were taking the oil and iran received very little revenue from it and iran pleaded, hey, we need more from our own oil. They had an election. They elected mosadek. Okay. British petroleum didnt like that. Appealed to mr. Truman to come in and help them get rid of mosadek. Truman said no. Eisenhower was elected and brought onboard the Island Brothers and got to read the history. Its amazing how imperialistic they were. But anyway, the bottom line is they got rid of mosadek and its been an ongoing battle. So when the shaw was put in place, they armed him with everything he needed to keep the people under control. And some of it was brutal. And remember the there was the group under rockefeller and so on. What they did, they wanted to bring the shaw to america. That started the strife with the hostage issue and reagan reagan, he got involved in that. He, as a matter of fact, under reagan, under president reagan ended up doing what iran just did. They shot down an iranian airliner using a system that had not been thoroughly developed. So here we are. But where we are with this whole issue, heres what my republican friends that dont realize, okay, that that party, the republican party, has been more so behind the collapse of this country because if you look you start with reagan, look at all the deficits that were built up, all the money the military. Then you jump from there to 2008, our nation was on its knees. Four president s were involved in that particular period. One was a democrat. He balanced the budget. Where did all the deficits come from . So here we are. This iran has been the trigger. It has been the issue behind a slow creeping collapse of the economy here in america. Okay. Antoine halff, do you have any thoughts on that . Yeah, im not sure about the creeping collapse. Im not sure theres a collapse, but i think whats very interesting, your remarks, sure, you bring the historical per sperktive which typically is not front of mind in the u. S. But very much front of mind in iran. Very much a sense of historical continuity and historical grievances. The ousting of mosadek in 1953 by the cia and the uk secret service is very much something thats remembered and a source of continued grievance in iran and its very important to keep that in mind. In the last two days, i think the government in iran has tried to leverage the mentmory of thi event and tried to equate somehow the assassination of soleimani with the ouster of mosadek in an effort to build up public support for the government. I dont think thats been sufficient and weve seen the last couple days massive demonstrations, massive unrest, against the regime despite its efforts to strike support to stroke public support for itself. Okay. Michael, gambrills, maryland. Republican. Caller yes, hi, thank you for having me. Go ahead. Caller yeah, i think that theres a bigger underlying problem here, you know, i mean, the problem with iran didnt just start, you know . It was like the caller previous to me had stated, it started a long time ago. 1979. The overthrow of the shaw. But i think right now israel is really pushing americas buttons to start a war with iran and also pushed the buttons in america to get us started with fighting against israel and nobodys talking about this. I mean, its like a gorilla in the room and our one ally in the middle east has been, you know, kind of forcing our Foreign Policy in the middle east to overthrow regimes and, you know, fight with all these countries in the middle east and, you know, we could be friends with iran. We could get their oil. You know, we could control it just like we control saudi arabias oil. You know, and there doesnt need to be this. Okay, but, Antoine Halff, do we need irans oil . Well, we dont need to import it ourselves, but the market can use some of the iranian barrels and, you know, i think everybody would benefit if iran was economically secure in democratic regime. As far as israeli enticement on the u. S. , i think israel actually probably is a greater risk today postsoleimani assassination than it was before. The risk of retaliation is very significant and iran has in hezbollah in lebanon a proxy force with which it can threaten israel. Trent were not done with the process of retaliation. Although iran said recently it wouldnt strike any more u. S. Facilities in iraq, the potential for continued retaliation is very significant in the future. Nobody knows what the retaliation will target, but its very much there. Well go to trent in gadson, alabama. Republican. Caller good morning. Good morning. Caller hey, i just had a concern. A concern. I was looking here at cspan today, oil prices and things like that. Natural oil, we got synthetics, i was wondering what happens, you know, in the environment with the synthetics, you know, over natural oil . Is it anything that goes on . You know, the epa, with the environment. You know, some of the things that might happen with synthetics, you know, compare it to burning natural oil, you know, and the iran prices and things like that and, you know, and whats used in coal. I think my dad liked to burn synthetics in toyotas now and talking about they had been shipping oil to asia. Im saying if theyre shipping oil to asia, why are they burning synthetics in toyota and things like that . All right, trent. Antoine halff . Yeah, theres been a lot of research in alternative fuels, particularly for cars. And Synthetic Oil was popular at a time. I think nowadays thats not where most Research Efforts are directed. Theres much more research and much more development in electric vehicles maybe lng, hydrog hydrogen, but Synthetic Oil has taken a back seat with the surge of election in the u. S. Synthetics were really attractive when we thought we were running out of pioil. Theres more oil than we can burn. Theres more interest in renewables, lowcarbon fuels. Hydrogen, lng perhaps for truck transportation for shipping, are the research in alternative fields today. All right. Well go to josh in iowa. Independent caller. Good morning to you, josh. Caller good morning, greta. Good morning. Caller hey, sir, i have a question about the production of oil in north dakota. What effect does the slight disruption that happened with the iran, you know, thing we have going on with iran right now, what effect does that have on the north dakota production, and what would have to happen in the World Markets for more wells to be built, started to be built again, in the north dakota fields . And i have a second question as well. Any go ahead, mr. Halff. Answer his first. Okay. Any kind of price increase is good news for u. S. Producers and theres been since the in the immediate aftermath of the attacks, both the soleimani assassination and then the retaliation by iran, theres been a little bit of hedging. You know, producers have taken advantage of the price increase in lock in some profits, future profits, in the market by buying into the futures market. That being said, north dakota is not where most of the shale production goes thats taking place. The most political base, the one thats grown really very rapidly has been the permean basin in texas and noix knoew m. If youre looking at the very short term in north dakota, were getting into the winter, thats typically a time when north dakota production goes down seasonally because of the very harsh weather conditions which are affecting operations in the field. And your second question, josh . Caller its just pretty easy, at what price does at what price per barrel of oil does the american production, and im most concerned with north dakota, at what price does the american production really ramp up . I think were around 60 a barrel now. At what price it really depends. Theres a wide range. It depends on the individual producers and for some producers, it might be 60. For some, 70. For many producers, increasingly a growing number of producers now lower, 40, 50, maybe 30 in some cases. Generally speaking, theres been a shift or kind of a gear change in the u. S. Industry in north dakota as well as other markets. And until recently, the industry was really trying to increase production at any cost. Even if it had to be in the red. Production growth was really the name of the game. And over the last year and a half or so, wall street investors, the industry, have really changed the expectations and are really demanding that producers demonstrate profitability, demonstrate flow and not increase production at any cost but increase their earnings, their profits. So i think thats setting the stage for a slower pace of Production Growth in the u. S. Were seeing a sort of shift in the nature of the industry. The cast of participants is changing as well. The small private owners that were driving most of the production at the beginning are being pushed out of the market. Increasingly, its large independents and majors like exxon, shell, are increasing their footprint, but much more conservative their approach at least in some cases so were i think even if we see a price increase, were likely to see a slower reaction from the shale industry than weve seen in the past in the case of previous price increases and the lag, the amount of time that it would take from a price hike to translate into production increase is going to be quite significant. Its not going to be instant. Its not going be something that market can rely on in the event of a supply disruption. If saudi production goes down, we cant count on u. S. Production in north dakota or texas or new mexico to immediately ramp up production to make up for that supply loss. Well go to mike. Crystal city. Democratic caller. Caller hi, im wondering i heard you say i guess china and japan and all those countries are dependent on the saudi oil and oil coming out of the persian gulf. Now, why arent they down there protecting the straits and why do we have american soldiers in saudi arabia protecting their oil . I think thats a question theyre probably asking themselves as well. Theyre interested in raising their military profile, security profile, in the persian gulf and theres a sense of discomfort in the idea that the u. S. Might not be as active, as reliable, in terms of maintaining security in the gulf than it was in the past. Suddenly some of statements that President Trump has made have been a source of unease and weve seen some of the importers in east asia increasingly raise their profile in the gulf. Increase their military presence. Theyre not making up for any drop in the u. S. , but the question youre asking so many questions theyre asking themselves as well. Antoine halff is the Senior Research scholar with columbia university. You can follow their work if you go to energypolicy. Columbia. Edu. Thank you, sir, for your time. Thank you very much for having me. And our live coverage resuming here on cspan3 in washington. At a transportation and infrastructure forum