Sooner or later, the US government must allow general export of crude oil. Sooner would be better than later.
A couple of recent developments illuminate the need.
First, crude oil exports are reported by the Energy Information Administration to have jumped in February to their highest level since April 2000. The amount wasn’t great: 124,000 b/d. And all of it went to Canada, which is exempt from a ban in place since 1979.
But demand outside the US exists. And domestic supply is growing.
The second development was a call for removal of the export ban from the head of the International Energy Agency.
In a May 14 press conference, IEA Executive Director Maria van der Hoeven said companies will find ways to dodge the prohibition if it remains in place. They can, she said, export products and unfinished oils.
In a Financial Times article earlier this year, Van der Hoeven warned that the export ban eventually might limit US production, which is rising because of the technology-enabled surge from unconventional resources.
The US government nevertheless acts wary of oil and gas exports.
Only one project for the export of LNG has received the full suite of federal approvals. The regulatory bottleneck for other projects has been Department of Energy permission to ship LNG to countries not party to a US free trade agreement (FTA).
This week, Freeport LNG received non-FTA export approval for a liquefaction plant at its Quintana Island, Tex., terminal. The project awaits construction approval from the Federal Energy Regulatory Commission.
LNG exports still face political opposition, manifest in a probably hopeless bill to ban them.
Not even that much attention has befallen the export of crude.
It’s a difficult sell. Notwithstanding rapidly growing production, the US will remain a net oil importer. US liquids production remains roughly half of consumption.
Americans will doubt the wisdom of letting any of it go abroad. They need instruction in logistics.
That conversation isn’t happening. It needs to start soon.
(Online May 17, 2013; author’s e-mail: [email protected])