Chicago Tribune: It’s about time to lift this awful, outdated crude-oil export ban, no?

posted at 5:31 pm on December 30, 2013 by Erika Johnsen

As I mentioned last week, 2013 has marked the year of the United States’ biggest acceleration in domestic oil production, ever, and we’re not too far off from bypassing our own record for total crude-oil output — which makes it rather inconvenient that the United States is still operating under the anti-free trade policies of a bygone era of artificial scarcity. Back in the 1970s, in the midst of a tussle with the Middle East, the U.S. enacted an embargo on any exports of crude oil with the misguided goal of enhancing America’s domestic energy security. The shale revolution recently brought on by hydraulic fracturing, however, means that we’re newly awash with oil and gas products — and the only way to take full advantage of that boom is to unleash American competitiveness on the global market and allow energy companies to reap the economic benefits.

The Chicago Tribune gets it, and they broke it down in a useful editorial this morning:

U.S. crude can be exported only if the federal government deems the shipments consistent with the national interest. That vague legal standard has in effect made it impossible for oil producers to export crude, except a small amount sent to Canada, although exports of gasoline and other refined products have been soaring lately.

Like free trade in general, selling American oil overseas would be good for our economy. It would make the oil market more efficient, encourage a build-out of the U.S. energy network and stabilize prices over time for consumers.

This is no small matter: By some estimates, drillers could be generating billions of dollars in annual revenues from exports within a few years if the ban were lifted. That additional business would translate into job creation as the oil industry invested in refineries and transportation networks to handle the light, high-quality crude being produced domestically. …

Lifting the export ban also would demonstrate Washington’s commitment to free and fair commerce as trade negotiations get rolling with Europe and Asia.

There have already been avowals both for and against the lifting of the embargo, but the Obama administration has tentatively hinted they might be open to reexamining the issue — and with energy companies newly minted access to more crude oil than they can sell or refine on the strictly American market, they’re going to pushing this issue bigtime in 2014.


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It is like watching Giant and Obama is like Rock Hudson.

Mr. Joe on December 30, 2013 at 5:35 PM

I’m glad to hear that this is coming up for scrutiny. There is absolutely nothing to be gained by restricting exports. Oil is a fungible commodity and it is in ours and everyone else’s interests to allow the markets to work freely and efficiently.

MJBrutus on December 30, 2013 at 5:43 PM

If the dems can figure out how to take ownership of the product they will allow for its export.

DanMan on December 30, 2013 at 5:51 PM

It is like watching Giant and Obama is like Rock Hudson.

Mr. Joe on December 30, 2013 at 5:35 PM

H0m0phobe.

davidk on December 30, 2013 at 5:53 PM

It’s like watching “Giant” and not falling asleep. Or whatever, that flick was D.U.L.L. dull.

Bishop on December 30, 2013 at 5:59 PM

I’m glad to hear that this is coming up for scrutiny. There is absolutely nothing to be gained by restricting exports. Oil is a fungible commodity and it is in ours and everyone else’s interests to allow the markets to work freely and efficiently.

MJBrutus on December 30, 2013 at 5:43 PM

Fungible to what?

davidk on December 30, 2013 at 6:00 PM

That additional business would translate into job creation as the oil industry invested in refineries and transportation networks to handle the light, high-quality crude being produced domestically. …

How many lawsuits filed in friendly enviro courts would the producers have to get around to even think about building a refinery?

docflash on December 30, 2013 at 6:06 PM

That additional business would translate into job creation as the oil industry invested in refineries and transportation networks to handle the light, high-quality crude being produced domestically. …

How many lawsuits filed in friendly enviro courts would the producers have to get around to even think about building a refinery?

docflash on December 30, 2013 at 6:06 PM

Not to mention that exporting would encourage more drilling — just the exact opposite of what Ogabe and the eco-whack-a-doodles want.

catsandbooks on December 30, 2013 at 6:10 PM

When Obama has lost the Trib…..

Another Drew on December 30, 2013 at 6:14 PM

Congressional lid on lawsuits:

“…notwithstanding any other law…refining for export, and the exports themselves are authorized…”

Another Drew on December 30, 2013 at 6:17 PM

Lifting the export ban on crude oil makes sense, but what would make MORE sense is to remove the EPA regulations on greenhouse gas (read: carbon dioxide) emissions from refineries, which have inhibited the expansion in refining capacity.

If refining capacity could be greatly expanded in the USA, the extra crude oil we produce could be refined by American workers (hint: thousands of high-paying American jobs), and prices for refined products such as gasoline, diesel fuel, jet fuel, and heating oil would decrease on the domestic market, and refining companies would make lots of money on exports to foreign countries.

The greenies will complain that Big Oil is getting rich, but those who work in the refineries will also make good salaries, and most people have Big Oil stocks in their IRA’s and 401(k)’s, and will share in the wealth of Big Oil. A win-win for everyone.

Steve Z on December 30, 2013 at 6:22 PM

U.S. crude can be exported only if the federal government deems the shipments consistent with the national interest.
================================================

Sweet Bibby,..is this a scene out of Ann Rands Movie,

Atlas Shrugged!!!

http://www.youtube.com/results?search_query=Atlas+Shrugged+scenes&sm=12

canopfor on December 30, 2013 at 6:25 PM

Keep the oil embargo, lift the refinery restrictions.

Cheap gas for us and we can sell the refined product on the open market.

Give a little, take a little.

Sapience on December 30, 2013 at 7:10 PM

Ahh, the moments when it would be nice if news and editorial sources had to provide any associations they have with the parties or issues they are writing about.

Genuine on December 30, 2013 at 7:31 PM

Steve Z on December 30, 2013 at 6:22 PM

BZZZZZZT!

Ob00ber can’t allow that.

avagreen on December 30, 2013 at 7:43 PM

docflash on December 30, 2013 at 6:06 PM

We have over 600,000 barrels per day of refining capacity shutdown because it is too much.

Would the morons who don’t know shiite from shinola please shut up about building more refineries.

Kermit on December 30, 2013 at 7:58 PM

e have over 600,000 barrels per day of refining capacity shutdown because it is too much. Would the morons who don’t know shiite from shinola please shut up about building more refineries.

Or drill 600,000 more barrels per day.

If you are right.

wolly4321 on December 30, 2013 at 8:26 PM

Or 1,200,000 more barrels/day,, and build some more fluking refineries.

When was the last one built?

wolly4321 on December 30, 2013 at 8:30 PM

1976?

That Dept of Energy is a fvcking spectacular success.

wolly4321 on December 30, 2013 at 8:40 PM

wolly4321 on December 30, 2013 at 8:26 PM

Why, for export? Where, to Venezuela?

Kermit on December 30, 2013 at 8:42 PM

wolly4321 on December 30, 2013 at 8:30 PM

That’s 600,000 bpd more than needed. We have expanded capacity at numerous refineries over the last 10 years and other were made more efficient.

Build more refineries and the price of gasoline will go up as more refiners are bankrupted, doofus.

Kermit on December 30, 2013 at 8:49 PM

Kermit on December 30, 2013 at 8:42 PM

Is it worth money? Then sell it.

Are you suggesting there are no buyers?

wolly4321 on December 30, 2013 at 8:49 PM

wolly4321 on December 30, 2013 at 8:49 PM

At a loss, there are plenty, but refiners will go bankrupt.

Kermit on December 30, 2013 at 8:49 PM

Thanks for the “doofus” part. It’s sure to make me put more stock in what you espouse.

Have a nice day. :)

wolly4321 on December 30, 2013 at 9:01 PM

Well, your arguments are that of a doofus. Look, for over a year refineries were all losing money because of a gasoline glut and selling product at below cost to produce. We’ve expanded overall refining capacity substantially in the last 10 years. We’ve torn down old inefficient refineries in the last 3 years. They had become financial black holes.

And don’t bring up that Hyperion refinery for North Dakota. They never even filed for a permit and never any contracts to buy or lease the land. All hype and 100% scam b.s.

Quote morons like Bachmann and Newtron all you want.

Kermit on December 30, 2013 at 9:05 PM

If states are not oil producers, it is not in their best interest to allow exportation of crude. They will be paying more for fuel. If you want to talk about “freedom”, well, maybe this union of states thing becomes a worse idea with time. You are subjugated by some crackpot idea called a “majority”.

Buddahpundit on December 30, 2013 at 9:24 PM

No oil for the blue states. They’re so “progressive”, they don’y need energy.

RobertMN on December 30, 2013 at 9:30 PM

Buddahpundit on December 30, 2013 at 9:24 PM

At present, most states actually rely on oil refined in TX and LA. The problem is that crude WTI (a widget of fiction) in no way reflects global oil market with prices about $10 per barrel less than world rates, and gluts of oil able to reach the refineries in TX & LA but not those on the East or West Coasts. East Coast refineries unable to purchase crude oil from Canada’s east coast (its historical market) because they can get more money in Europe.

You have oil with high condensate (natural gasoline) percentages in oil close to refineries which are configured for heavy crude oil but not close to refineries configured for light sweet crude oil.

It’s a matter of logistics and cost of logistics that makes exporting desired.

Kermit on December 30, 2013 at 9:34 PM

Kermit on December 30, 2013 at 9:34 PM

Don’t forget the a$$wipe EPA requiring different fuel blends for different regions, such that refinery overcapacity in one region cannot be used to supply a different region at a cheaper price.

Because the EPA knows better.

Wanderlust on December 30, 2013 at 9:46 PM

Fungible to what?

davidk on December 30, 2013 at 6:00 PM

Crude oil is generally almost as fungible as cash, on world markets: a tanker of crude – depending on grade – can be sold into almost any country on the planet.

Interestingly enough, if you wanted to cap Venezuela in the knees, you’d allow greater oil production so that refineries geared to process Venezuelan heavy crude (among the worst “sour” crude due to its high sulfur content) would have a higher supply of lighter oils from other areas.

Ditto for increasing the worldwide supply of crude oil so that the price drops and Russia’s military buildup ambitions are kicked in the proverbial gut…which would make sense to any President that isn’t a Democrat…

Wanderlust on December 30, 2013 at 9:51 PM

That’s 600,000 bpd more than needed. We have expanded capacity at numerous refineries over the last 10 years and other were made more efficient.

Build more refineries and the price of gasoline will go up as more refiners are bankrupted, doofus.

Kermit on December 30, 2013 at 8:49 PM

You say there is a glut of gasoline on the market, but we still have >$3/gal.

What market force is at work here?

Damn shame that theoildrum disbanded. /

Murphy9 on December 30, 2013 at 10:11 PM

Kermit on December 30, 2013 at 8:49 PM

What percentage of domestic refineries in TX and LA are running at or above design capacity? What percent are using deferred maintenance to cope?

I am genuinely curious, because I do not know.

Difficultas_Est_Imperium on December 30, 2013 at 10:51 PM

The Left’s war on fossil fuels is just a part of their general War on Wealth Creation, but an important one.

While Obama brags about our oil production, he fails to mention he has not authorized any new production on federal land since taking office, only prohibited drilling in various areas. All production on federal lands are from leases that were either approved or in the very last rubber-stamp formal stage of it when he took office.

Being “green” has NOTHING to do with the environment and everything to do with attacking capitalism at its life-blood, energy.

Adjoran on December 31, 2013 at 2:27 AM

This ban on exports is one of the reasons Alaska production is falling. Why pump more oil from Alaska which is relatively expensive to produce when the lower 48 is awash with more oil than we can refine now? If we could sell crude for export, Alaska’s production would come back up. Meanwhile politicians are blaming tax policy for the decrease but that isn’t the reason. The reason is there is nowhere to send any excess production to. Our refineries are working at full capacity.

If we can’t export crude, then EPA and state regulators need to allow more refineries to be built so we can export refined products.

This is once again a case where we have artificially high refined products while we are awash in oil because we can’t build refineries.

crosspatch on December 31, 2013 at 2:55 AM

crosspatch on December 31, 2013 at 2:55 AM

Oil from Alaska is exempt from export ban, that was part of legislation to get TAPS built. We’ve exported a fair amount to Pacific Rim nations from AK, but not to Hawaii, because the sulfur content is too high for the two refineries in HI.

Kermit on December 31, 2013 at 10:48 AM

Difficultas_Est_Imperium on December 30, 2013 at 10:51 PM

None at overcapacity but capacity has been expanded via new construction at a number of refineries in the Midwest and Gulf Coast during the last 10 years. The largest was the $29+ billion dollar one in Port Arthur at Motiva.

We demolished dozens of refineries in the 1980′s and into the 1990′s which were small, old, inefficient, and unable to use any but light sweet crude.

Kermit on December 31, 2013 at 11:01 AM

Difficultas_Est_Imperium on December 30, 2013 at 10:51 PM

Perhaps you mean what is called nameplate capacity, which would be more accurate.

A refinery is designed and built with the nameplate capacity being for a specific type, or types, of crude oil. Capacity actually varies with type of crude oil being refined. For instance take an idle refinery which I recently tried to sell. It is rated for 12,000 BPD but for my intended customer it would have operated at 15,000 BPD because of type of crude he would have been using. It was shutdown because it only had access to local crude via truck which was a 60 API gravity crude. Such a very light crude caused capacity to drop to under 10,000 BPD and thus uneconomical.

Point being that capacity is relative to crude oil sources.

Also there are some refineries which recover some of the light ends but really only make asphalt. They pretty much just cook down vacuum tower residual bottoms or very heavy crude oil. They recover the vapors which have been boiled off and the residual is asphalt to be used in roads, making shingles, etc…

Kermit on December 31, 2013 at 11:25 AM

It doesn’t matter what the subject of the story is … any time the Tribune editorializes against against an O’Bozo policy, the story is the Tribune’s idiotic endorsement of this talentless, sleazy, know-nothing cretin in 2008.

Jaibones on December 31, 2013 at 11:54 AM

Kermit on December 31, 2013 at 10:48 AM

Uhm, well, we haven’t been exporting any:

“Export of crude oil transported in the Trans-Alaska Pipeline System was banned until 1996. Between 1996 and 2004, nearly 95.49 million barrels of crude oil, equal to 2.7% of Alaskan production during that period, was exported to foreign countries. As of April 2013, no Alaskan oil has been exported since 2004.”

http://www.eia.gov/tools/faqs/faq.cfm?id=35&t=6

crosspatch on December 31, 2013 at 12:35 PM

Point is that we have and it was legal, ONLY FROM ALASKA

Kermit on December 31, 2013 at 2:19 PM

Republicans claim to want energy independence, and then want sell off this nation’s oil for the short term benefit of a few. Is energy independence a national security requirement of is that for sale too? THAT represents what’s most wrong with Republicans, a single representation of why most Americans will never vote for you. You are as misguided and/or phony as the worst leftist progressives!

Defund the RNC, and empower REAL constitutional conservatives and make this a Happy New Year!

elfman on January 1, 2014 at 3:34 PM

There is absolutely nothing to be gained by restricting exports.
MJBrutus on December 30, 2013 at 5:43 PM

We have nothing to lose except energy independence!

Oil is not fungible in the same sense as currency. If $10B of Alaskan crude is sold to China, $10B of China’s crap is sold to Venezuela, $10B of Venezuelan ultra heavy oil is sold to Texas and then war disrupts this, we will not be able to fully redirect Alaskan crude to Texas refineries for months or perhaps years.

elfman on January 1, 2014 at 3:44 PM

Ditto for increasing the worldwide supply of crude oil so that the price drops and Russia’s military buildup ambitions are kicked in the proverbial gut…which would make sense to any President that isn’t a Democrat…

Wanderlust on December 30, 2013 at 9:51 PM

Russia’s military is only damaged if aggregate world oil production increases,… maybe. If the US just exports X more oil and imports X more, the only affect of US oil exports on Russia is that its military has more targets: oil tankers coming from and going to the US.

elfman on January 1, 2014 at 4:03 PM

Republicans claim to want energy independence, and then want sell off this nation’s oil for the short term benefit of a few. Is energy independence a national security requirement of is that for sale too? THAT represents what’s most wrong with Republicans, a single representation of why most Americans will never vote for you. You are as misguided and/or phony as the worst leftist progressives!

Defund the RNC, and empower REAL constitutional conservatives and make this a Happy New Year!

elfman on January 1, 2014 at 3:34 PM

Problem is that tight shale oil production is not cheap with some new emerging formations requiring price AT THE WELLHEAD of $100+ per bbl. Production of oil in TX tight shale formations is not a good fit for Gulf Coast refineries which need heavier crude oil than that extremely light crude. It is about matching refineries with crude oil sources. Let’s not keep trying to put square pegs into round holes, which you seem to prefer.

Kermit on January 1, 2014 at 7:38 PM

Ditto for increasing the worldwide supply of crude oil so that the price drops and Russia’s military buildup ambitions are kicked in the proverbial gut…which would make sense to any President that isn’t a Democrat…

Wanderlust on December 30, 2013 at 9:51 PM

Russia’s military is only damaged if aggregate world oil production increases,… maybe. If the US just exports X more oil and imports X more, the only affect of US oil exports on Russia is that its military has more targets: oil tankers coming from and going to the US.

elfman on January 1, 2014 at 4:03 PM

Same goes for U.S. oil drilling and production. Prices going any lower than say $70 per BBL will bankrupt many oil production companies and most of those drilling wells in tight shale formations.

Kermit on January 1, 2014 at 7:40 PM