U.S. Oil Output Growth To Slow As Global Prices Sink: Obama Adviser

The United States will continue to boost oil production but falling global prices will slow down the pace, President Barack Obama’s chief economic adviser said on Sunday.

“Even at a lower price of oil we are going to continue to see an increase in the production of oil. It will just increase at a lower rate than it otherwise would have,” Jason Furman told Reuters on the sidelines of a business conference in Israel.

After Saudi Arabia on Nov. 27 blocked calls from poorer members of the OPEC oil exporter group for production cuts to halt a slide in global prices, some analysts speculated the Saudis might be willing to live with lower prices to stop U.S. oil production efforts.

Brent crude slipped below $69 a barrel on Friday, to finish the week below $70 a barrel for the first time since 2010, as cuts to official selling prices from Saudi Arabia added to recent pressure.

“The low price of oil is a big tax cut for consumers which helps consumer spending,” Furman said. “All modeling shows on net it is a positive for the U.S. economy, which is consistent with the fact that the United States is still a net importer of oil.”

When asked when the president aimed to fill two open Federal Reserve governor seats, Furman said: “We are moving to fill those seats.” But he declined to elaborate.

In a speech at the conference, Furman said that while the U.S. economy was strong, with job growth its most robust in 15 years, Europe, Japan and other areas needed more stimulus due to weak demand and low purchasing power.

He called on Germany’s government to spend more to boost demand, especially since near-zero inflation indicated weak demand.

“Germany has the world’s largest current account surplus … There is a lot of space to expand domestic demand,” Furman said.

The United States has ratcheted up pressure on Europe in recent months to act decisively to help its economy, which Treasury Secretary Jack Lew has said faces a “lost decade” of low growth.

Nathan Sheets, the Treasury’s undersecretary for international affairs, last week said the European Union’s central bank should take “continued steps” to stimulate growth and that countries with strong fiscal positions and exports should encourage more consumer spending.

Furman also said Israel could benefit from a more transparent and stable regulatory framework, especially in the energy sector and called on the country to open up trade, especially in the agriculture sector.

Source : reuters