Moving right along from the 1970s, US considers change to crude export policy
Congress made most oil exports without a licence illegal in the 1970s to conserve supplies at a time when Organisation of the Petroleum Exporting Countries embargoes produced long lines at petrol stations and threatened the US economy. But over the past five years, a frenzy of oil drilling in shale rock formations in Texas and North Dakota have produced a glut of crude in the Midwest and Gulf of Mexico states.
"Those restrictions on exports were born, as was the Department of Energy and the Strategic Petroleum Reserve, from oil disruptions," Dr Moniz said on Thursday. "Lots of energy issues deserve new analysis and examination in the context of what is now an energy world that is no longer like the 1970s."
The Energy Department does not have the power to relax restrictions on exports, but Dr Moniz said that it would be willing to produce technical analysis on the issue for the Commerce Department, which issues the export licences.
Oil companies are lobbying to allow exports, arguing that the US could substantially increase export earnings from selling high-quality crudes abroad. That type of crude oil is not easily refined by US refineries that were outfitted for processing lower-quality crudes imported from Mexico, Venezuela and the Middle East.
The lobbyists argue that such exports could lower global oil prices, which would bring relief for US consumers. But others, including influential members of Congress, say that oil exports would actually raise domestic petrol prices and threaten domestic oil supplies at times of crisis in the Middle East or Africa.
"If the Department of Energy and others push on Commerce, then maybe they can get it over the hump," said Chip Johnson, president of Carrizo Oil & Gas, a midsize Texas oil company active in the shale oil fields. "I think we should keep national security first, but we should export oil just like anything else."
Oil companies are already beginning to export more oil to Canada because those export licences are relatively easy to obtain. Canada is the largest exporter of oil to the US, but because many grades of US oil are selling at a discount to global benchmarks, eastern Canadian refiners are buying US crude to process into diesel and petrol.
In the first 10 months of the year, the US exported an average of 95,000 barrels of crude oil a day, mostly to Canada. Over the same period in 2012, the US exported an average of 67,000 barrels a day and 23,000 barrels a day in 2007, when US oil production began its expansion.
Some analysts predict that exports to Canada will soon approach 200,000 barrels a day.
But some Democratic lawmakers are already voicing concerns about exports.
"The growing chorus from the oil industry to change long-standing US law to permit the export of American crude oil is a disturbing trend," Senator Edward Markey said. "This oil should be kept here in America, to benefit our consumers and to reduce our dependence on imports from the Middle East." New York Times
Frequently Asked Questions about this Article…
The US is considering changing its crude oil export policy due to a significant increase in domestic oil production, particularly from shale formations in Texas and North Dakota. This has led to a surplus of crude oil, prompting discussions about whether the longstanding export ban, established in the 1970s, should be reconsidered.
The US crude oil export ban was originally implemented in the 1970s to conserve oil supplies during a time of OPEC embargoes, which caused fuel shortages and economic threats. The ban aimed to protect the US economy by ensuring domestic oil availability.
Lifting the crude oil export ban could potentially lower global oil prices, which might benefit US consumers by reducing fuel costs. However, some argue it could also raise domestic petrol prices and threaten oil supplies during international crises.
The Department of Energy does not have the authority to change export restrictions but can provide technical analysis to the Commerce Department, which is responsible for issuing export licenses. The Energy Secretary has suggested that current energy policies deserve reevaluation.
Oil companies are lobbying for the ability to export crude oil because they believe it could significantly increase export earnings. US refineries are not well-suited to process the high-quality crude produced domestically, making exports a potentially lucrative option.
Opponents of lifting the crude oil export ban, including some members of Congress, are concerned that it could raise domestic petrol prices and compromise national security by reducing oil availability during international crises.
US crude oil exports have increased, particularly to Canada, due to relatively easy-to-obtain export licenses. In the first 10 months of the year, the US exported an average of 95,000 barrels of crude oil a day, up from 67,000 barrels a day in 2012.
US crude oil exports could potentially lower global oil prices by increasing the supply of high-quality crude on the international market. This could provide relief to consumers worldwide by reducing fuel costs.
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