The U.S. oil boom is moving Congress closer than it has been in more than three decades to easing the ban on exporting crude imposed after the Arab embargo.
Congress has limited oil exports since the 1973-74 Arab oil embargo triggered shortages that pushed up prices and led to long lines at gas stations. An increase in domestic production last year by a record 766,000 barrels a day [please see my remark below - D.R.] is challenging a notion that Americans need foreign oil, while setting up a debate policy makers may be reluctant to begin.
“Americans are unbelievably politically sensitive to oil and more specifically to gasoline prices,” Salisbury said in an interview. “For politicians to do anything, the pain has to come first. You have to see the rig count fall and then and only then can we have a decision about whether we want to export crude.” [...]
The U.S. sends about 120,000 barrels of crude a day to Canada under a Commerce Department license. Congress allows exports from Alaska’s Cook Inlet and for consumption in Canada, along with sales determined by the president to be in the national interest.
Exports must expand to sustain the boom that increased U.S. production last year by the most since the first commercial well was drilled in 1859, said Robin West, chairman of the oil consulting firm PFC Energy. Output is putting the nation on pace to surpass Saudi Arabia as the world’s largest producer by 2020, according to Energy Department data. [...]
The oil rush, spurred by technology that makes it cheaper and easier to extract oil from rock formations, has boosted U.S. stockpiles of light, sweet crude, which is less costly to process than high-sulfur grades pumped by Saudi Arabia and Venezuela, making it more profitable for export. Landlocked by the ban and limits on transportation, U.S. light oil trades at a discount to the European blend that sets prices for more than half the globe’s oil.
“If you have an opportunity to export the more expensive product and import the cheaper one, why not do it,” John Felmy, chief economist with the Washington-based American Petroleum Institute, said in a telephone interview. “It’s something that we as a country need to take a look at.”
Still, Americans may balk at the idea of sending oil overseas because they’re concerned it may lead to higher gasoline prices, said David Goldwyn, president of Goldwyn Global Strategies LLC, a Washington-based energy consultant. [Read more]
(According to EIA data, U.S. crude oil production, including lease condensate, increased from 5.652 million barrels a day in 2011 to 6.505 million barrels a day in 2012, i.e., an increase of 853,000 barrels a day in just one year - the largest single-year increase in U.S. oil production ever recorded!---please see here - D.R.)