Moving right along from the 1970s, US considers change to crude export policy
Signalling a possible break with 40 years of energy policy, Energy Secretary Ernest Moniz has suggested it may be time for the Obama administration to reconsider the United States' ban on exporting crude oil.
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