Energy Boom: US Crude Oil Exports Hit A 15-Year High
U.S. oil exports are continuing to boom as world demand for American petroleum grows along with skyrocketing domestic production. Government estimates show that U.S. oil exports reached a 15-year high in March.
The Energy Information Administration reported that the U.S. oil industry exported 246,000 barrels per day in March 2014 — the highest level since 1999. Crude oil exports have exceeded 200,000 barrels per day in four of the last five months and crude oil production reached 8 million barrels per day in February.
But U.S. lawmakers are saying that crude oil exports could be driven even higher if the federal government got rid of strict limits on exports. Some Republicans have been calling for the Obama administration to lift the effective ban on crude oil exports to help drive down the U.S. trade deficit and spur energy development.
To export crude oil, a company must apply for a license from the Commerce Department which can be approved or denied by the government depending on a number of factors. Export restrictions on U.S. crude oil exports came out of the OPEC oil embargo during the 1970s — a time when energy was viewed as a highly scarce resource.
“The current rules of engagement on energy trade were written at a time of energy scarcity, not abundance, and they are causing distortions in the market that is undervaluing America’s energy resources,” said Alaska Republican Sen. Lisa Murkowski.
“It’s time to reverse a policy that has far outlived its usefulness – something that would benefit the entire country,” Murkowski said.
Environmentalists and some Democrats have opposed allowing more oil exports on the grounds that such action would contribute to global warming. Liberal groups have also argued that lifting the export ban would drive up gas prices.
“There is no concrete independent analysis that lifting the ban on crude oil exports would leave gasoline prices or energy security unaffected,” wrote Daniel Weiss and Miranda Peterson of the Center for American Progress, a liberal think tank founded by now White House adviser John Podesta.
“Until there is, President Obama and Congress should resist pressure from Big Oil to trade away our enhanced gasoline price stability and energy security in the name of more oil profits. Instead, they should defend the ban on crude oil exports,” Weiss and Peterson added.
But a recent analysis by the consulting firm IHS found lifting the U.S. crude oil export ban would boost domestic oil production by more than 2 million barrels per day and lower gasoline prices by 12 cents per gallon.
Energy analysts and the oil industry argue that U.S. refiners are mainly geared towards refining heavy crude oil from the Middle East or Canada, not the light, sweet crude that is coming out of U.S. shale formations. This has led to a glut of oil sitting in the U.S. while refiners build up their capacity to handle the lighter crude.
The glut of oil has kept the price of U.S. produced oil artificially low, meaning refiners can increase their profit margins since the prices of refined petroleum goods, like gasoline, are set on global markets.
“The IHS analysis reinforces what I’ve been saying for months — modernizing the regulations that govern energy exports will create jobs, boost energy production, and help lower global oil and gasoline prices,” Murkowski said.
Almost all the crude that has been allowed out of the U.S. has gone to Canada — most of the recent oil exports have been from the Gulf Coast region. Exporting to any other country besides Canada is rare. These exports have mainly been re-exported crude oil, meaning the oil extracted abroad and is simply being passed through the U.S. to another country. U.S. companies have re-exported crude oil to China, Costa Rica, France, South Korea, and Mexico.
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