• 3 minutes Will Iron-Air batteries REALLY change things?
  • 7 minutes Natural gas mobility for heavy duty trucks
  • 11 minutes NordStream2
  • 4 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 11 hours U.S. Presidential Elections Status - Electoral Votes
  • 1 day Evergrande is going Belly Up.
  • 1 min Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav
  • 2 days Is China Rising or Falling? Has it Enraged the World and Lost its Way? How is their Economy Doing?
  • 5 days Poland Expands LNG Powered Trucking and Fueling Stations
  • 12 hours Europeans and Americans are beginning to see the results of depending on renewables.
  • 5 days World’s Biggest Battery In California Overheats, Shuts Down
  • 4 days The unexpected loss of output from wind turbines compels UK to turn to an alternative; It's not what you think!
  • 1 day Forecasts for Natural Gas
  • 3 days Ten Years of Plunging Solar Prices
  • 3 days Extraction of gasoline from crude oil.
Nick Cunningham

Nick Cunningham

Nick Cunningham is an independent journalist, covering oil and gas, energy and environmental policy, and international politics. He is based in Portland, Oregon. 

More Info

Premium Content

U.S. Oil Export Ban Unlikely To Be Scrapped Soon

Whether or not the U.S. Congress decides to lift the ban on crude exports will largely depend on the trajectory of crude oil prices. Oil prices have been elevated for several years, with West Texas Intermediate (WTI) fluctuating a bit above and below the $100 per barrel mark, and Brent prices going for a few dollars more. These prices give Congress pause, with many members worried that allowing oil exports to move forward would lead to even higher prices, pressing the limits of what the American consumer would be willing to tolerate.

Crude Oil Prices
 Source: EIA

The crude export ban has been in place since the 1970’s and was originally enacted to fight high prices caused by the Arab oil embargo. The localized glut of oil experienced in various parts of the United States – largely because of a mismatch between production and infrastructure in certain areas – has contributed to the spread between WTI and Brent. This has created a division within the usually unified oil and gas sector, with producers aggressively calling for scrapping the ban and refiners supporting the status quo.

Related Article: U.S. Will Export Oil – Who Wins and Who Loses?

Senate Energy and Natural Resources Chairman Mary Landrieu (D-LA) and ranking Republican member Lisa Murkowski (R-AK) recently called on the Energy Information Administration (EIA) to conduct a detailed study of the effects of crude oil exports. “This is a complex puzzle that is best solved with dynamic and ongoing analysis of the full picture, rather than a static study of a snapshot in time,” they wrote in an April 11 letter to EIA Administrator Adam Sieminski. Both senators support a lifting of the ban. Senators Ron Wyden (D-OR) and Maria Cantwell (D-WA), both of whom are more skeptical of allowing exports to move forward, also want the EIA to study the issue, but with a focus on the impact on gasoline prices. The issue has become a prominent one on Capitol Hill as a wave of lobbying pushes the issue to the top of the Congressional agenda. At the same time, the ongoing crisis in Ukraine has given ammunition to export supporters.

But selling the American people on the idea will not be easy. There are few issues that incite the ire of voters more than a quick spike in gasoline prices, and the link between “shipping oil overseas” and higher prices could be an obvious connection in voters’ minds. While producers would rather talk about “job creation” and higher export earnings, scrapping the export ban would almost necessarily result in higher prices – that’s why there is a price differential between the two benchmarks in the first place.

As the Wall Street Journal points out, refiners are ramping up exports of petroleum products from the Gulf of Mexico, and gasoline prices could climb as inventories drop. The completion of the southern leg of the Keystone XL pipeline reduced the glut of oil in Cushing, Oklahoma, and refiners are using the oil to export refined products at an unprecedented level. Exports of refined products jumped by 10% in 2013 from a year earlier. With greater access to global consumers, oil futures have risen by 6.1% so far this year. In other words, more exports mean more demand, which could lead to higher prices at the pump. Liberalizing energy exports may or may not be good energy/economic/trade policy, but either way, it will be a political hot potato as consumers feel the bite.

Related Article: U.S. Oil Boom Makes Gas Cheaper, but not by Much

This is why, despite the momentum export proponents have built in recent months, scrapping the export ban may not come anytime soon. In a recent report, Bank of America doesn’t see the ban being removed anytime soon. “A full repeal of the crude oil export ban is at least five years away under most scenarios,” Francisco Blanch, the New York-based head of commodities research, said in the report. The only way that the move could be become more palatable for Congress, according to BofA, would be if crude prices dropped significantly. This would provide some political room to lift the ban since consumers would not feel the impact as much, and drillers would be even more desperate to find new markets for excess oil.

A collapse in oil prices is not entirely out of the question, with a surge in supplies coming from Iraq, Libya, and the United States. But, until that happens, getting Congress to lift the ban on crude oil exports is unlikely.

By Nicholas Cunningham of Oilprice.com


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News