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Dan Dicker

Dan Dicker

Dan Dicker is a 25 year veteran of the New York Mercantile Exchange where he traded crude oil, natural gas, unleaded gasoline and heating oil…

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Another Stupid US Energy Policy Decision

The recent ruling by the Commerce Department, allowing Pioneer Natural Resources (PXD) and Enterprise Product Partners (EPD) to export light ‘condensates’ puts an effective end to the export ban.  It will have multiple effects on both the exploration and production companies working in the Permian, Eagle Ford and Bakken shale plays as well as domestic refiners.  But even more importantly, it represents another stupid US energy policy decision that is blind to long-term US energy needs that does nothing except increase the profits of a few domestic E+P players.  

Many analysts have discounted this decision to allow very marginally distilled crude oil to be considered a ‘refined’ product and allow its export.  But this is a giant crack opening up in an export ban that has been in place since the 1970’s keeping domestic crude at home.  Pioneer CEO Sheffield has been lobbying for an end to the ban as has Harold Hamm of Continental Resources (CLR) and now they have the workaround they need to avoid a Congressional battle.  The Commerce Department will soon be flooded with similar requests for condensate workarounds from Continental, Cimarex (XEC), EOG Resources (EOG) and several other lesser players, all of whom will be able to recapture the margin discount between domestic and global crude and the current discounts on Permian and Bakken oil.  

Refiners in the Gulf coast like Valero (VLO) got pummeled yesterday and that’s no fluke.  The margin advantage that they’ve…




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