THE LONGER the downturn lasts, the more opinions we hear about how to "fix it." Most of the theories and proposals are short on details but long on rhetoric. However, a few may be worth considering, so let's look at a couple of them.

LIFTING THE US CRUDE OIL EXPORT BAN

The decades-long ban on exporting US crude oil has finally ended. In December, President Obama signed into law a budget bill passed by Congress that lifts the prohibition of crude oil exports. Although nearly everyone I know thinks this is a good idea, there is no evidence that removal of the ban will cause domestic prices to go up in the short term or that it will stimulate exploration and development in the current business climate. If prices were higher, yes. But not in the present low-price environment.

The folks over at Houston-based Opportune say that lifting the crude oil export ban creates both winners and losers. In time, says Opportune's Phil Steed, US producers can expect to realize higher prices for the oil they sell, eventually achieving parity with the world market. However, it will take a while for markets to equilibrate as logistics are optimized for exporting US crude. Refiners, on the other hand, will see a decrease in refining margin as their feedstock price rises. Consumers may expect a small increase in prices from decreased refined product availability as less crude oil is refined in the US and more is exported.

A TAX ON OIL IMPORTS

President Obama recently proposed a $10 per barrel tax on oil in order to raise about $32 billion in revenue to fund transportation infrastructure and green technology. This is akin to the referee kicking an injured player on the field. Fortunately, there is virtually no support for the proposal, which would put an additional burden on domestic producers at a time when Saudi Arabia and OPEC are trying to drive many of them into bankruptcy.

In a Feb. 21 editorial, the Houston Chronicle suggests that instead of an oil tax, the US should consider taxing OPEC - that is, placing a tax on imported oil. This, argue the opinion editors, would create a domestic price floor that would increase domestic production, lower US reliance on foreign oil, and create a more stable oil market.

The editorial points out that even as oil prices linger in the low $30s, the US is importing nearly 8 million barrels per day of foreign crude. Much of this is merely in storage. An import tax would help erect a barrier to such dumping and maintain prices at a higher level than it would without the tariff.

There would be ramifications to a tax on oil imports, but isn't that better than doing nothing while Saudis and Russians collaborate on ideas that will help both countries increase market share? We should find a way to exclude our neighbors in Canada and Mexico from paying the import tax, but what benefit has it been to the US to allow OPEC to set production quotas and prices?

SAUDI ARABIA'S ACTIONS MAKE PERFECT ECONOMIC SENSE TO SAUDI ARABIA

In his latest "Musings from the Oil Patch," PPHB's Allen Brooks offers some insights into what Saudi Arabia's leaders may be thinking as they accelerate oil production. He cites a presentation by James Krane, a fellow in energy studies at Rice University's Baker Institute for Public Policy, delivered at a recent energy and technology conference. Brooks said he took away two key points:

The new leaders of Saudi Arabia see a more rapid ending of the Age of Fossil Fuels than others see. As a result, they are keen to produce more oil from Saudi Arabia's reserves sooner than ever because they are afraid of waking up one day and finding that a significant portion of their crude oil reserves are stranded because the market for them has dried up. They would rather produce and sell oil in a low-price environment than risk losing their markets as the world transitions to greener energy sources.

The other point, which reinforces the first, is that recent Saudi investment in two new refineries in China is aimed at ensuring the kingdom's status as a provider in that giant market. Keeping prices low also helps kill or reduce such long-term development projects as Canada's oil sands and deepwater drilling, thus assuring markets for low-cost Saudi oil. As a one-product economy, Saudi Arabia has a reason to worry about the future as its product is depleted and its global markets disappear.

There is no easy way out of the crisis that has engulfed the global petroleum industry. As long as the world is awash in oil, prices likely will remain depressed. However, it gives us some comfort to know that our best minds are examining root causes in an effort to find a solution. Let's hope they come up with some answers soon. Too many companies are failing, and too many good employees are losing their livelihood.

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