U.S. May Lift Oil Export Ban
May 21, 2014
According to the Wall Street Journal, the Obama administration is considering lifting the federal ban on crude oil exports.
With the rise of hydraulic-fracturing, or fracking, the United States has seen a boom in oil and gas production. By 2020, the U.S. is expected to become the world's largest oil producer.
But what many Americans may not realize is that a series of 1970s-era laws prohibit most exports of crude oil, creating market distortions. With soaring domestic production, oil-rich areas in the U.S. are flooded with oil, and U.S. oil prices are low compared to prices in the world market.
This week, U.S. Energy Secretary Ernest Moniz said that the federal ban should be reexamined, noting that some of the American oil supply is unsuitable for domestic refining. The light shale oil from Texas and North Dakota requires different production processes than does the heavy oil from Latin America and Canada.
Not everyone is in favor of lifting the ban. Some fear that lifting the ban will cause U.S. oil prices to rise, as several domestic industries -- including refineries -- have benefited from lower prices and a lack of foreign competition. Prices of diesel and gasoline, which are not subject to export restrictions, have risen 60 percent since 2008.
The U.S. has seen similar debate over natural gas exports. Chemical makers and other companies that require natural gas have opposed the exports for fear of price increases, but the Obama administration has so far approved seven gas export plans.
Source: Amy Harder and In-Soo Nam. "U.S. Oil-Export Ban Is Under Review," Wall Street Journal, May 13, 2014.
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