The U.S. won’t intervene in the oil market amid falling crude prices, according to Amos Hochstein, the U.S. State Department’s energy envoy.
The U.S. will let “the market” decide what happens, Hochstein said in an interview at a conference in Abu Dhabi yesterday. Hochstein is special envoy and coordinator for international affairs at the State Department’s Bureau of Energy Resources.
“When people ask the question ‘what will the U.S. do?,’ it’s really the market that’s going to have to decide what happens,” Hochstein said. “This is about a global market that is addressing the supply-demand curve.”
Asked what the U.S. could do about falling prices and instability in oil markets, he said: “We do have mechanisms to work with our partners around the world if something extreme happens, but that’s not where I think we are and I think the markets so far can adjust themselves.”
Oil prices have dropped 53 percent in the past year as growing production from the U.S., Russia and the Organization of Petroleum Exporting Countries overwhelmed demand. The International Energy said last week that the effects on U.S. production are so far “marginal.”
West Texas Intermediate was $1.32 lower at $47.37 a barrel in electronic trading on the New York Mercantile Exchange at 11:32 a.m. Singapore time, compared with the close of Jan. 16. Brent lost 9 cents to $48.75.
“One of the most remarkable aspects of this recent period has been the resilience of the American energy market,” Hochstein said. U.S. oil production growth has swelled to its fastest pace in more than three decades, driven by output from shale deposits.
Cheaper oil prices won’t stop development of alternative energy sources, he said. “We have really switched paradigms here where renewable energy really can continue to grow, even when there are low oil prices,” he said. “That’s true globally.”