Texas

Energy and Environment Reporting for Texas

Here’s Why the U.S. Banned Crude Oil Exports

 A tug boat navigates the Houston ship channel with a flare from an oil refinery and storage facility in the background south of downtown Houston

REUTERS /RICHARD CARSON /LANDOV

A tug boat navigates the Houston ship channel with a flare from an oil refinery and storage facility in the background south of downtown Houston

It might sound surprising that the U.S. does not allow the export of one of its most valuable and plentiful natural resources — but in the case of crude oil, it’s true.

A lot of Texas politicians would like to see the ban overturned, and soon lawmakers in the U.S. House of Representatives may vote on just that.  But why is there a ban in the first place?

The year is 1973. It’s midway through the Arab-Israeli war, and the Organization of Oil Exporting Countries just made an historic announcement.

OPEC will reduce oil production by five percent a month until the Israelis withdraw from occupied territories.

Within days the war is over, but the impact of the “oil shock” remains. Prices skyrocket, and U.S. vulnerability is revealed.

A couple years later, the U.S. Department of Energy sums it up in a documentary called “When the Circuit Breaks: America’s Energy Crisis.”

“Unless we conserve while we look for new energy sources, we face the recurring threat of embargoes, of energy sources breaking without warning,” says the film’s dramatic voiceover.

The export ban was a key part of that “conservation.” The idea was to make sure the oil that was produced here, stayed here. But a lot has changed. In fact, there are hints of that change buried in that same old film.

“Oil shale — oil-filled rock — is being mined and processed in an experimental plant,” the film said. “Though it’s now expensive to get crude oil out of the rock, it could someday answer a good portion of our oil needs.”

Thanks to hydraulic fracturing, or fracking, and horizontal drilling, that’s exactly what happened.

So here we are.  People who want to lift the ban say exporting shale oil will be good for business – especially in oil-rich states like Texas. They also think it will help the country strategically.  Opponents say it could hurt the economy and the environment.

Over it all floats another big question: just how competitive would US oil be on the international market? OPEC still controls the price, and many OPEC countries can produce oil more cheaply than the U.S.

You’re sure to hear more from all sides in the days ahead. Congress could vote on lifting the export ban before the end of the month.

 

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Comments

  • Lee Morgan

    This was obviously written by an oil man. IF THE RESOURCE IS SO PLETIFULL AND TAPPED TO PRODUCE THEN WHY IN GODS NAME DO WE HAVE TO IMPORT MILLIONS OF BARRELS OF OIL PER DAY? I challenge the person and I use that term loosely to tell me that , got something to say? dennism431@aol.com leave it there. If we produced enough oil per day to meet our needs and not have to import, And all the storage tanks and national reserve were filled to capacity I would have no problem with selling it. But all they are wanting to do know is going to raise prices and the truth is americans are hurting and need cheap, gas, oil power and water. most of us have had to take pay cuts or just haven’t gotten raises in a decade the true numbers are out there if you do the research and look past the government lies

    • larry

      you stupid like our congressmen or women .america refinery is setup to refine heavy sour crude not america light oil .

    • Jay

      Because now we have been able to develop SHALE formations where in the past we did not have the technology. Sounds like you are selective in the information you read! Please educate yourself with the facts!

    • Daniel D

      Lee, you are uninformed on a topic that impacts so much of your life it should be embarrassing. But, the sad reality is you are like most of the American population in understanding where things that are consumed come from. The short explanation is that not all crude is the same. A barrel of crude oil from West Texas is not the same as a barrel of crude oil from the West Coast or a barrel of crude oil Saudi Arabia. The chemistry is different and what that crude oil can be used to make is related to the chemistry of the crude oil. Crude oil being produced by the “shale revolution” is “light”. Our refineries are configured to largely process a blend of crude oils on the “heavy” side of the spectrum. The EIA has written a report on this that might be helpful. Removing the export ban would put US producers on a level playing field with foreign oil and would encourage continued production growth here in the US. American is great, and the recent increase in domestic crude oil production to levels not seen since the 70′s is evidence of that, but we are at a significant disadvantage to foreign producers in a world market.

      http://www.eia.gov/analysis/requests/crude-exports/pdf/fullreport.pdf

  • Drarwin

    Too high a price has been paid ( our soldiers lives ) ! . So that some banker and oil company can make a buck .

  • Cplogic

    According to a March 2015 report we have enough refineries in the USA to handle all the light crude production from fracking. The are planning to triple this quantity. There is no restriction on exporting refined petroleum, so what it seems the oil companies want is to avoid America Refining and ship more jobs overseas. BTW, attacking a person instead of the argument, does not improve your argument.

    • Parth Patel

      Thank you for the input.
      Would it be correct to say that US is pushing the refinery jobs overseas because any profits from international-refined-oil sales after a ban lift would be offset by high-wage costs for US-based employees?

      Or is there more to this story about US not wanting to sell its ‘sweet’ crude internationally despite its refining capabilities?

      Also, is the international export ban only crude, but not on refined oil?

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