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As the US oil industry gains momentum with its lobbying efforts to lift the ban on crude exports in place since the 1970s, what has gone largely unnoticed is that US exports of refined oil products, which are not banned, have been steadily rising thanks to the shale boom and a reduction in US consumption of oil products. The overall result, according to a “Charticle” by RealClearEnergy, is a “precipitous decline in oil imports, to the point where they now barely surpass domestic production.”
US oil exports have cut the gap to 5.7 million barrels per day, with exports largely of refined petroleum products rising since 1992 from 1 million bbd to 3.5 million bbd. These numbers will be skewed if the Keystone XL pipeline is approved because imports will spike from the transit of Canadian crude across US borders to Gulf Coast refineries—but at the same time, much of this refined product could then be exported.
This is all without lifting the ban on crude exports, which was imposed after the Arab oil embargo of the 1970s.
The US oil industry sees great potential in lifting this ban, but convincing the public is more challenging. To do so, the industry is insisting that lifting the ban on US oil exports would bring gas prices at the pump down—but plenty are still concerned that the opposite would be the case. On the issue of lifting the crude export ban, American voters are split pretty much down the middle. As Oilprice.com has noted before, a Reuters poll found that as soon as you bring up gas prices, Americans noticeably shift on this issue, with a majority opposing a lifting of the crude export ban because they fear it would lead to higher prices at the pump.
Exports of refined petroleum products will likely continue on their steady increase, but the time is not yet ripe for Congress to lift the ban on crude exports. There is still much work to be done to sway the public in this direction—but this is the direction in which we are heading.
It is, however, a likely eventuality, especially with the Energy Information Administration (EIA) constantly promoting its prognosis that the US will overtake Saudi Arabia and Russia to become the world’s largest oil producer.
That said, the EIA has come out this week with a new prediction: US daily crude production will slow in 2015, for the first time in three years, with oil producers expected to increase production by around 750,000 bpd—less than the predicted daily increase of 1.03 million barrels for this year. They attribute this to falling oil prices that will reduce incentive for production due to falling demand for motor fuels amid greater fuel efficiency and less driving.
However, even with this predicted dip in production for 2015, we’re still looking at levels close to those in 1972—the height of US oil production.
That’s it from us this week.