Bill Richardson: Why Oil Prices could Drop to $45

The United States should lift the ban on exporting oil and natural gas because it could bolster national security and create jobs, former Energy Secretary Bill Richardson told CNBC on Friday.

“OPEC is diminished as a cartel but not out of the picture,” he said in a “Squawk Box” interview. The U.S. should “reach out to the European Union to be the main suppliers of natural gas to Europe instead of the Russians.”

The former governor of New Mexico, who served in the Clinton administration at Energy and as ambassador to the United Nations, predicted that oil prices could drop to $45 a barrel.

“The geopolitical situation is going to be affected,” he said. “Russia is going to continue having economic problems because of their budget.” He added that Venezuela, Nigeria and Iran will also feel the squeeze in connection to lower oil prices.

U.S. crude continued to decline early Friday, hitting a session low of $58.50—the lowest price since July 2009—as the International Energy Agency cut its forecasts for global oil demand growth in 2015.

On Thursday, oil dropped below $60 a barrel in New York trading—a move that took a lot of the steam out of Thursday’s powerful rally on Wall Street and sent global stock markets sharply lower Friday.

“We’re hurting a little bit right now with the lower oil prices—states like mine, New Mexico, that depend on that budget,” said Richardson. “A lot of small drilling companies are starting to hurt. A lot extraction is diminishing.”

But the U.S. is on the road to energy independence and it’s not because of the government, he added. “It’s the private sector. It’s schools becoming more energy efficient. It’s businesses.”

As for the long-delayed Keystone pipeline, he put the odds of eventual approval at 50/50.

(Source: Matthew J. Belvedere – CNBC.com)