The Obama administration ever-so-slightly loosens the U.S. crude oil export ban, sort of

posted at 3:21 pm on June 25, 2014 by Erika Johnsen

Since the 1970s, energy producers in the United States have been disallowed from exporting crude oil to any country other than Canada — even though refined products like gasoline and diesel do not share those same export restrictions. It’s a policy that has never made much economic sense, and one that in this day and age of fracked abundance we preserve to our own outright economic detriment. The technological revolution that has only recently unlocked our vast underground energy reserves has mercifully landed the long obsolete export ban back on Congress’s docket, but at the glacial pace at which that debate is moving, it’ll be awhile yet before both chambers of Congress actually get around to legislating it — and in the meantime, the Obama administration actually made a tiny gesture this week that might help pave the way to eventually lifting the ban. Via the WSJ:

The Obama administration cleared the way for the first exports of unrefined American oil in nearly four decades, allowing energy companies to start chipping away at the longtime ban on selling U.S. oil abroad.

In separate rulings that haven’t been announced, the Commerce Department gave Pioneer Natural Resources Co. and Enterprise Products Partners LP permission to ship a type of ultralight oil known as condensate to foreign buyers. The buyers could turn the oil into gasoline, jet fuel and diesel.

The shipments could begin as soon as August and are likely to be small, people familiar with the matter said. It isn’t clear how much oil the two companies are allowed to export under the rulings, which were issued since the start of this year. The Commerce Department’s Bureau of Industry and Security approved the moves using a process known as a private ruling.

For now, the rulings apply narrowly to the two companies, which said they sought permission to export processed condensate from south Texas’ Eagle Ford Shale formation. The government’s approval is likely to encourage similar requests from other companies, and the Commerce Department is working on industrywide guidelines that could make it even easier for companies to sell U.S. oil abroad.

Again, it will take an act of Congress to move the outward flow of unrefined oil products anywhere beyond a very small trickle, but I’m glad to see the Obama administration actually follow through somewhat on its stated promise to free up U.S exports — and one which, however infinitesimally at this stage, could boost our wealth- and job-creating capabilities. The specific approval the administration just granted is for a unique type of ultralight oil called condensate, of which we have fairly suddenly found ourselves with a huge glut because of the shale revolution, but hey, it can still be turned into gasoline abroad. That’s a good thing, because while opponents of lifting the crude oil export ban often argue that doing so will push the prices that U.S. consumers pay at the pump higher, the reality is that releasing more supply into the global market could actually exert downward pressure on those prices (Americans basically pay the global market rate for gasoline and refined products, and keeping U.S. crude prices artificially low effectively acts as a subsidy for U.S. refiners while producers are disincentivized from bothering to drill in the first place). If this condensate export approval can lead by example on that front, then all the better for the entire crude-oil export debate.

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“Listen, Jughead you even think of touching my railroad monopoly with that pipeline and there will be consquences.”



viking01 on June 25, 2014 at 3:32 PM

That’s an idiotic ban.

anotherJoe on June 25, 2014 at 3:33 PM

Valerie must have been in the bathroom. She’ll get Obama to backtrack on this in no time!!

Deano1952 on June 25, 2014 at 3:39 PM

We are developing new technologies that allow us to produce vastly greater amounts of various energy products. Now if we ban exports, the domestic market is likely to be insufficient and become glutted, and thus development will stop. Jobs and huge levels of income … lost. And benefits to the world energy market lost as well. The ban on oil exports is totally insane.

anotherJoe on June 25, 2014 at 3:45 PM

Would it be sane for Saudi Arabia to ban oil exports? No. And a similar situation is developing for us. It’s makes zero economic sense to ban oil exports as we ramp up our oil production.

But you know what? It’s the fear mongering warmists that want to do anything they can to impede or constipate our energy production and markets. And global warming is bunk:

anotherJoe on June 25, 2014 at 3:49 PM

In separate rulings that haven’t been announced, the Commerce Department gave Pioneer Natural Resources Co. and Enterprise Products Partners LP permission to ship a type of ultralight oil known as condensate to foreign buyers. The buyers could turn the oil into gasoline, jet fuel and diesel.

Condensate is usually lighter and contains less sulfur and heavy bottoms material than most crude oils, which makes it more valuable for refiners, and it can fetch a premium over crude oils on the world market.

Steve Z on June 25, 2014 at 4:04 PM

The article is not very clear. It is not really exports of crude and it is not anything new, they gave two companies permits to export condensates. Condensates have always been allowed to go to export , with a permit. See article specifically says “processed condensates” for the permit not any crude oil that can make it to the water!

bluemarlin on June 25, 2014 at 4:05 PM

Good news: Obama administration allows crude oil exports.
Bad news: EPA institutes new guidelines that require export tankers to be filled via handheld eyedroppers. To fight climate change.

orangemtl on June 25, 2014 at 4:24 PM

Why don’t we FIRST stop importing 3.3 million bbl/day from OPEC ??

KenInIL on June 25, 2014 at 4:43 PM

Just to keep the growth rate above 0 for the second quarter.

J.B. Say on June 25, 2014 at 5:29 PM

White House says there has been no change to US policy on exports of crude oil – @Reuters

canopfor on June 25, 2014 at 5:32 PM

Retweeted by Jonathan Fahey
Rob Wherry @RobWherry · 7h

Big Oil is spending more to get crude out of the ground but is getting less return for its investment. $XOM $COP $CVX

canopfor on June 25, 2014 at 5:40 PM

The Commerce Dept screwed up. They thought that the ‘ultra light oil’ was WD-40. Expect the ban back in 4…3…2….

vnvet on June 25, 2014 at 7:23 PM

It’s designed to be a talking point, so the lofo voters can be tricked by yet another vacuous sound bite while real Americans shake their heads in sad amazement.

Tard on June 26, 2014 at 9:42 AM