The White House is taking an “active look” at the crude oil export ban, whatever that means

posted at 6:41 pm on May 9, 2014 by Erika Johnsen

The United States’ crude oil production is on track to hit an all-time record high within just a few short years, and most fortunately for America, that fact doesn’t seem to be entirely lost on an otherwise fossil-fuel begrudging Obama administration. I shudder to think what the monthly jobs reports would look like if the White House wasn’t riding on the coattails of our incidental production growth, although the president is still looking for potential ways to exert more authority over hydraulic fracturing (the technology that very suddenly and fortuitously for him spurred the shale boom on state and private lands) and his administration has been deliberately sluggish with issuing drilling permits for offshore and federal lands — but the way the regulatory situation stands right now, opening up more areas for drilling actually might not be that helpful anyway.

U.S. producers have been mostly prohibited from exporting crude oil (not to be confused with refined gasoline) since the drama with OPEC back in 1973, and because of our specific refining capacity, we are already rapidly approaching the point at which the U.S. market won’t be able to absorb much more production growth. Instead of sittin’ pretty with a glut on our hands, allowing crude-oil exports would enable Americans to take full advantage of our abundant energy resources and to create jobs and grow wealth uninhibited by utterly arbitrary free-trade restrictions; Obama’s Energy Secretary Ernest Moniz has mentioned before that the administration might be willing to get on board with some revisions to the ban, and even one of his ultra-progressive senior advisers echoed that sentiment this week, via the Financial Times:

The White House is examining the longstanding US ban on exports of crude oil, a senior official has said, offering the Obama administration’s most detailed statement yet of its thoughts on the issue.

John Podesta, who is one of President Barack Obama’s most senior advisers, said the administration was “taking an active look” at the strains caused by the US shale oil boom. Any change would have implications for oil traders, refiners and consumers worldwide. …

Asked on Thursday about the administration’s thinking on crude oil exports, Mr Podesta said: “We’re taking an active look at what the production looks like, particularly in Eagle Ford, in Texas, and whether the current refinery capacity in the US can absorb the capacity increase to refine the product that’s being produced.”

“We’re taking a look at that and deciding whether there’s the potential for effectively and economically utilising that resource through a variety of different mechanisms,” he told Columbia University’s Center on Global Energy Policy conference in New York.

The politics of lifting the ban — both for the executive and the legislative branches — are (needlessly) tough, especially since critics on both side will raise the specter of potentially higher gasoline prices, but I’ll let Scott Lincicome at the Cato Institute take care of that one:

Because U.S. and Canadian refinery capacity is finite, America’s newfound energy abundance has led to a glut of domestic oil and caused domestic crude oil prices (West Texas Intermediate and Louisiana Light Sweet) to drop well below their global (Brent) counterpart.  One might think that this price divergence would mean lower U.S. gas prices, but such thinking fails to understand that U.S. gasoline exports may be freely exported, and that gasoline prices are set on global markets based on Brent crude prices.  As a result, several recent analyses – including ones by Citigroup [$], Resources for the Future and the American Petroleum Institute – have found that liberalization of U.S. crude oil exports would lower, not raise, gas prices by as much as 7 cents per gallon.

Read: The price we pay for actual gasoline at the pump is largely determined globally, while refiners enjoy the domestic benefits of a closed crude market — and the sooner we can rid ourselves of the self-inflicted opportunity costs of the export ban, the better off we’ll be.


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It means they are looking for ways to curtail crude oil production, they will be using the same examination procedures Google uses to examine banned AdSense Blogs.

oscarwilde on May 9, 2014 at 6:46 PM

If there is such an abundance of oil then why are gasoline prices so damn high?

bgibbs1000 on May 9, 2014 at 6:47 PM

What makes me shudder is how many people who would love to work, who need to work, who could be employed but are otherwise just scraping by, if the demorats and ecofreaks would allow us to pursue our own effin energy sources right under our feet.

Bishop on May 9, 2014 at 6:56 PM

If there is such an abundance of oil then why are gasoline prices so damn high?

bgibbs1000 on May 9, 2014 at 6:47 PM

They explain that in the article.

unclesmrgol on May 9, 2014 at 6:56 PM

It still doesn’t make sense, though. Why are gasoline prices so high? I get that they are set by the world price…. but why? Do we export all that much gasoline? If we do, then why do we need to export crude? Refine it here, then export it. Keeps the refining business going. Overseas refining doesn’t help us any.

If we don’t ship gas overseas, then why do our prices for gasoline track global markets?

Vanceone on May 9, 2014 at 7:02 PM

“Acitve Look” Is Bureaucratese for “18 year environmental impact study”.

trubble on May 9, 2014 at 7:03 PM

Why cant America build more refineries?

newportmike on May 9, 2014 at 7:04 PM

Podesta is pushing the envelope on expanding executive power, and he is daring anyone to challenge him.

onlineanalyst on May 9, 2014 at 7:09 PM

Is John Podesta taking Valerie’s place…or is he Mr. Outside and she is Mrs. Inside…?

d1carter on May 9, 2014 at 7:15 PM

We need more refineries, and we need to keep all energy produced here. High gas prices are not helping our economy, and the ‘benefits’ of exporting our energy do NOT outweigh the downside of high gas and energy prices.

avgjo on May 9, 2014 at 7:16 PM

Wait, the fans of the Bill O’Reilly Skule of Ekinomicks are at dinner and haven’t signed in yet!

slickwillie2001 on May 9, 2014 at 7:16 PM

Why cant America build more refineries?

newportmike on May 9, 2014 at 7:04 PM

EPA

RickB on May 9, 2014 at 7:16 PM

Why cant America build more refineries?

newportmike on May 9, 2014 at 7:04 PM

Go to the API’s website and look at the charts for refining capacity.

Murphy9 on May 9, 2014 at 7:22 PM

Why cant America build more refineries?

newportmike on May 9, 2014 at 7:04 PM

Are you trying to make the baby Jesus Mother Gaia cry?

oscarwilde on May 9, 2014 at 7:22 PM

Podesta was taken on board by the Obysmal administration to greenlight more executive power-grabbing. This is part of the reason that Obysmal is acting so brazen.

onlineanalyst on May 9, 2014 at 7:40 PM

Read: The price we pay for actual gasoline at the pump is largely determined globally, while refiners enjoy the domestic benefits of a closed crude market — and the sooner we can rid ourselves of the self-inflicted opportunity costs of the export ban, the better off we’ll be.

…ok!…I got no questions!

KOOLAID2 on May 9, 2014 at 7:51 PM

John Podesta, who is one of President Barack Obama’s most senior advisers, said the administration was “taking an active look” at the strains caused by the US shale oil boom. Any change would have implications for oil traders, refiners and consumers worldwide. …

Asked on Thursday about the administration’s thinking on crude oil exports, Mr Podesta said: “We’re taking an active look at what the production looks like, particularly in Eagle Ford, in Texas, and whether the current refinery capacity in the US can absorb the capacity increase to refine the product that’s being produced.”

Did Podesta or anyone else in the Obysmal Administration ever stop to think WHY current refinery capacity can’t absorb all the crude oil we’re producing? Because regulations put in place by the Obysmal Administration’s EPA make it impossible to permit a new refinery, and very difficult to expand the capacity of an existing refinery! Back in 2010, they were imposing regulations forcing power plants and REFINERIES to capture harmless CO2 emissions–to stop the seas from rising, or something like that.

Exporting crude oil might help ease a short-term glut, and may help the United States get some money back after getting screwed by OPEC for decades. But the real solution is to ease the restrictions on refinery permitting to build more refining capacity in this country–to provide lots of high-paying jobs at new refineries, and be able to produce all the fuel we need in THIS country, and sell what’s left over to our allies in Europe, so they don’t have to bow to Vlad the Impaler, and we don’t have to bow to the Prince of Arabia.

Steve Z on May 9, 2014 at 7:52 PM

Obama has been “sluggish” with new permits?

REALLY?

So how many has he issued in 5+ years?

Also: anything a Podesta has his hands in will do no one any good who is not a Podesta or in bed with one.

Adjoran on May 9, 2014 at 8:16 PM

We have an oil export ban?

Count to 10 on May 9, 2014 at 8:19 PM

We have an oil export ban?

Count to 10 on May 9, 2014 at 8:19 PM

Oh yeah. Also “unprocessed” natural gas.

Obama is out to kill fossil fuels, and he is using every tool at his disposal to do it, no matter the cost to humanity and America.

Adjoran on May 9, 2014 at 9:02 PM

Oh, we can’t export coal either.

Adjoran on May 9, 2014 at 9:03 PM

Podesta only has credibility among Democratic groupies.

oldennis on May 9, 2014 at 9:18 PM

This Administration is an unfortunate embarrassment.

oldennis on May 9, 2014 at 9:20 PM

Most domestic crude stays domestic (because it is cheaper to refine it here), with the exception of some Caribbean islands.

But Alaskan oil mostly goes to Japan. They might not be too eager about the ban.

Oil is a fungible commodity anyway, so this regulation only helps to drive up prices.

Evi L. Bloggerlady on May 9, 2014 at 9:30 PM

This makes no sense! We are trying to build the Keystone pipeline to import crappy Canadian tar sands crude which has a $70 floor price — lower than that it in not economical to get it out of the ground. The Keystone will ship this crappy, expensive crude to TX for refining where they have more product than they can possibly use, let alone the residual “pet coke”, a coal substitute, which TX does not need either.

Nearby the Keystone route is sweet ND crude which is now taken east to the Rust belt by expensive rail — 750 bbl/tank car; 1,000,000 bbl/day. (Remember the Lynchburg, VA derailment the other day?)

Meanwhile 3MM bbl/day of our 7MM bbl/day of imports comes from OPEC. What gives?

KenInIL on May 9, 2014 at 9:40 PM

The Gulf Coast refineries are set up for sour heavy crude- they cannot presently refine the light sweet that is being produced in the Eagle Ford Shale and the Bakkan, only the heavy from (currently) Venezuela and hopefully Canada tar in future.

We currently have excess capacity to produce diesel, so we export that to Europe while importing gasoline.

All this make sense? Sure- you can blame the EPA for not permitting any new refineries in the last 20 years. Thank God we have a Department of Energy or who knows where we would be.

*spits*

Dolce Far Niente on May 9, 2014 at 10:15 PM

Talking about 7 cents per gallon is useless. We need to drop gasoline prices by dollars, not cents. $1.86 the day Obama took office. Now it is double.

Sick.

HopeHeFails on May 9, 2014 at 10:52 PM

This means the White House is taking a poll to see if this will help keep the Senate in Democrats hands, or if they can blame it not getting done on the Republicans. The point is that everything out of this White House is politics and not what’s best for the country.

I’m sure they won’t disappoint me on this and actually do the right thing.

bflat879 on May 9, 2014 at 11:02 PM

What makes me shudder is how many people who would love to work, who need to work, who could be employed but are otherwise just scraping by, if the demorats and ecofreaks would allow us to pursue our own effin energy sources right under our feet.

Bishop on May 9, 2014 at 6:56 PM

THIS.

Leftists hate anything that allows the poor to pull themselves up into wealth by their own bootstraps – because the poor then no longer require Big Government types to “care” for them.

Wanderlust on May 10, 2014 at 3:44 AM

Steve Z on May 9, 2014 at 7:52 PM

Don’t forget that EPA requires refiners to offer various “blends” to different regions, in an attempt to mitigate smog. This means that artificial capacity shortages/surpluses are created due to refinery location vs demand. EPA only varies these blend requirements if a refinery or two in Louisiana has reduced or stopped production due to a hurricane.

This is the same EPA that required more expensive precious metals based smog equipment on automobiles in the early 1970′s because domestic automakers had developed platinum catalytic converter based smog reduction technology, which was more expensive than the smog reduction solution that Japanese automakers had developed.

The beauty of bureaucracies and Leftists (BIRM) is never having to admit f*ckups, but instead looking at every failure in abstract, assigning blame elsewhere (“evil corporations!!!”), then plunging ahead into ever more onerous regulations.

EPA needs to go the way of the CAB, but sadly, no Republican would ever have the ‘nads to do it…

Wanderlust on May 10, 2014 at 3:52 AM

It’s a good way to put flaming splinters under Putin’s fingernails, isn’t it?

{^_-}

herself on May 10, 2014 at 6:35 AM

yeah, let’s not flood the oil maket with more oil because the price will go down…and we all know how Obama promised Putin that he will be flexible after his re-election. the prospect of American oil flooding the market and potentially lowering Russia’s oil profits would just be abominable… wouldn’t it?

dk0sntrukt on May 10, 2014 at 8:52 AM

Obama’s Energy Secretary Ernest Moniz has mentioned before that the administration might be willing to get on board with some revisions to the ban, and even one of his ultra-progressive senior advisers (John Podesta) echoed that sentiment this week, via the Financial Times

We’re supposed to believe Gorgan the Friendly Angel and AlGore’s clone?

We’d get a more reliable “deal” from Casper Gutman and Joel Cairo, with or without Wilmer and Brigid O’Shaughnessy backstopping them.

clear ether

eon

eon on May 10, 2014 at 11:03 AM

This Podesta is a detestable cretin. Leave it to the Demonrats to put him in a position of influence. They are like a plague.

Jaibones on May 11, 2014 at 8:42 AM

Yeah, right. Lower gasoline prices.

gwhh on May 11, 2014 at 10:50 AM

Talking about 7 cents per gallon is useless. We need to drop gasoline prices by dollars, not cents. $1.86 the day Obama took office. Now it is double.

Sick.

HopeHeFails on May 9, 2014 at 10:52 PM

This. Why is the GOP not pointing this out in every campaign ad? The Dems sure scream about gas prices when they are trying to gain seats or the presidency, no matter where prices are. Who cares if Keystone or drilling in the Gulf won’t lower prices much? And, yes, prices are set globally to a large extent but increasing domestic production can make a difference, especially on the job front. No one likes to pay these prices, including the average Dem (not including the environuts here). Why is the GOP not harping on this daily instead of amnesty, of all things? High gas prices are one thing that everyone hates (including the Hispanics and illegals the establishment are courting) and I would think it would be low-hanging fruit. I just can’t believe that this is not a campaign issue.

inmypajamas on May 11, 2014 at 12:59 PM