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This Is Why Americans Will Pay More For Gasoline If U.S Export Ban Is Lifted
Submitted by Kurt Cobb via OilPrice.com,
They say that the first casualty of war is truth. And, on both sides of the fight over lifting the ban on exports of U.S. crude oil, the truth has already fallen into a coma. The ban was instituted in 1975 in order to make America less subject to swings in international oil supply after suffering the price shock associated with the Arab oil embargo in 1973.
Last week a committee in the U.S. House of Representatives voted to end the ban after a Senate committee voted in July to do the same. A vote by the full House and Senate could be near.
The proponents are careful NOT to say that the United States is energy-independent and so has oil to spare. Such claims made in the past backfired because it is too easy to look this up. Net U.S. imports of crude oil were almost 7 million barrels per day (mbpd) in the week ending September 4. That's out of about 15.6 mbpd of liquid fuels consumed domestically.*
Yet, it is this state of affairs that the proponents of lifting the export ban label as "abundance." Here's the relevant quote from the website of the Domestic Energy Producers Alliance (DEPA), a consortium of U.S. oil drillers: "Thanks to the genius of America's independent oil and natural gas producers, the world is moving from a concept of 'resource scarcity' toward 'resource abundance.'" (So, the world is not moving toward actual abundance, just the concept of abundance. But, I'm nitpicking.)
In another piece entitled "From Scarcity To Abundance: Why The Strategic Petroleum Reserve Is Unnecessary" the group is more bold, saying that the supposed "abundance" is right here in the United States:
US crude oil production has nearly doubled since 2008, rising from 5.0 million barrels per day (MMB/D) to 9.5 MMB/D today. These domestic supply gains are a direct result of technological breakthroughs in horizontal drilling and advanced well completion techniques. Over the same period, improved energy efficiency has reduced US demand growth. These combined factors have fueled a paradigm shift in our country from energy “scarcity” to energy “abundance.” (my emphasis)
The site also includes a graph deceptively labeled "U.S. Crude Oil Production Potential" showing what looks like a rise in production to 20 mbpd by 2025. DEPA can always claim that that graph just represents estimates by its backers. The graph, however, stands in stark contrast to the latest "Short-Term Energy Outlook" just released by the U.S. Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy.
Even the ever-optimistic EIA forecasts that U.S. crude oil production will fall next year by 400,000 barrels per day to 8.8 mbpd. In fact, its figures show that crude production actually already began its decline in April. Of course, this decline is partly a response to low oil prices as U.S. oil companies have dramatically reduced their drilling from 1,592 active rigs one year ago to 652 for the week ending September 11.
The central declaration on the DEPA site is as follows:
We must allow crude oil exports to develop America's resource potential. Developing America's resources decreases our dependence on foreign oil.
This comes even as we are told that U.S. oil production has nearly doubled since 2008 WITHOUT lifting the export ban. So, if sentence one has no basis, then it has no bearing on sentence two.
Now, if 1) the United States doesn't produce more oil than it needs, but rather remains the world's largest importer next to China and 2) the export ban didn't prevent domestic production from doubling, then what is the push to end the export ban all about? In a word, money.
There is not enough U.S. refining capacity for all the so-called light tight oil produced from U.S. deep shale formations which have been the mainstay for domestic oil production growth. That means that refineries that can use this type of oil are paying less (because of the excess supply) than they would if foreign refineries could also bid on the oil--which, of course, they can't because of the export ban.
Lifting the export ban would allow domestic oil producers of light tight oil to sell their output to foreign refineries at a higher price than they currently get from domestic refineries. But given the now ongoing decline in U.S. oil production, selling that oil to foreign refineries would mean that the United States would have to import more of other heavier oils (for which we have adequate refinery capacity) to make up for the light oil that is exiting the country. Thus, the United States would become MORE dependent on foreign oil if we lift the export ban.
The oil companies make the case that their product is discriminated against. Agricultural products, manufactured goods and even coal face no export restrictions. Why should oil be singled out?
There is debate about whether allowing essentially a "swap" of U.S. light oil for heavier foreign oil would raise the price of petroleum products such as gasoline, diesel fuel, heating oil and jet fuel in the United States.
What this move would surely do is force more U.S. refiners to pay higher prices for their oil inputs since they would have to compete against bidders across the globe.
The opponents of lifting the ban, not surprisingly, include U.S. refiners. Also included are consumer groups and petrochemical firms, firms which use oil as their feedstock.
These poorly funded opponents claim that lifting the ban would squander America's chance to be energy-independent. But given the yawning gap between the petroleum products it consumes and the oil the country is able to produce, it is highly unlikely that the United States will ever become energy-independent.
(It is important to note that the United States has long been self-sufficient in coal, and so far this year has imported only about 10 percent of its natural gas needs, almost all of it from Canada, our longtime major supplier. So, energy independence is really a codeword for oil independence. No mention is generally made of trying to become energy-independent by actually REDUCING energy use through conservation and efficiency--though there is occasional lip service given to the idea of reducing the GROWTH in energy demand.)
Whether the U.S. Congress will vote to lift the export ban just as members are about to go into an election year is an open question. But even if the Republican-controlled Congress does lift the ban, it's not clear President Obama will go along with the bill. Last year the administration did widen the definition of what is permissible to export beyond refined products which have long been legal to export. The administration moved to include condensate which is essentially ultra-light oil that starts as a gas under the tremendous pressures inside oil reservoirs and then condenses to a liquid once it reaches the wellhead.
But so far administration officials such as Energy Secretary Ernest Moniz have sidestepped the issue. It would make political sense for President Obama to veto any bill lifting the ban to rally traditional Democratic groups such as labor and environmentalists for next year's elections.
But, if the ban is lifted and that results in higher fuel prices for Americans, it might be a good thing in the eyes of those who want Americans to use less oil and to adopt renewable alternatives. Those renewables would, of course, become more competitive as a result of higher oil prices.
But until the country figures out how to get along without the millions of barrels of oil it imports each day, oil exports will only increase our dependence on foreign oil--which will have to be shipped in to replace the oil that would now be exported. This might lead to increased efficiencies in the oil industry as each type of crude would more easily reach the refineries best suited to refine it. But it's hard to see how oil exports would make the United States more energy secure.
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None of it matters because Jade Helm is going on until September 15th and they will be rounding us all up and sending us to detention centers at closed Wal-Marts and or killing us and....
Oh wait...
lol
The truth is that if you are still importing 7+ million barrels per day, then for you it is not abundant...
go ahead, export more and make all those low-wage (if they have a job) americans pay more...
and raise rates while you are at it!
Might as well sell off the SPR as well.
http://www.zerohedge.com/news/2015-07-23/strategic-petroleum-reserve-no-...
Maybe both GOP and Dems want higher oil prices -
GOP to help oil producers profit - DEMS to make alternative energy more competitive.
When both parties want the same thing it always turns out bad.
http://www.eia.gov/dnav/pet/pet_move_exp_dc_nus-z00_mbblpd_m.htm
We have such oversupply of gas in this country...which is why gas prices are so low compared to oil prices.........
If there's one thing I've learned over the years it's that the U.S citizen is that least of .govs concerns when it come to policy decisions.
True, vis-à-vis some citizens.
edit: Keeping both potential rioters and the enabling classes happy is very much in the interest of the state. Essentially, if one is within a single standard deviation of the socio-economic mean, one doesn't matter much.
More like U.S Chattel.
60-70% of your life is spent working to support parasites that call themselves government whether it be national or local.
You own nothing,,, you find that out when you are aged and on a limited pension. They seize "your" property and sell it for a Walmart / Mall parking lot or foolsball stadium.
Anything else requires license, permits, passport or some other type of mother may I permission slip.
And when they decide to attack someone they first bullshit / scare you, raise the flags, then send off "your" children to the slaughter house.
We only provide food and power for them to rule as they see fit. Yum Yum.
Bend over and spread 'em.
Best congress/administration money can buy.
If we could only export politicians the US would get to be a better place to live.
Who'd take `em?
You could always grind 'em into fish meal.
The first casualty of an Erhlichian is truth.
"But, if the ban is lifted and that results in higher fuel prices for Americans, it might be a good thing in the eyes of those who want Americans to use less oil and to adopt renewable alternatives. Those renewables would, of course, become more competitive as a result of higher oil prices."
Huh? Folks are BROKE. This is about price point. "Renewables" will STILL be more than conventional. AND, keep in mind that as energy costs go up that other industries go down: generating a further loss of jobs, which then makes for MORE broke folks.
We rose on conventional oils. We'll fall on them...
Oil prices are already higher at the pump that it used to be when oil was this low. I don't know if some inelasticity is in play.
ZH, here is the general theory of inflation. Do you know the answer to the critical question?
http://just-a-thought-from-thinair.blogspot.com/
http://just-a-thought-from-thinair.blogspot.com/2015/09/the-general-theo...
Canadian oil is gonna get cheap(er) for US import. FX YOY and Canadian economy set up for plunge.
Us continues to stockpile domestically. Open season on domestic drilling imminent. Let's not forget Natty.
Wind, hydro and solar gaining momentum.
Fuck you Saudi.
As the world collapses US will be the healthiest horse. Capital flows into US while other economies tank.
Financial repression scenario coming to US.
Deal with it.
Don't let the populations have more money they will use it for a revolution and restore law and order.
The oil ban has pluses and minus...however here in Texas, OK, LA, etc they burn off natural gas as a waste product. Since the industry in Texas supports 700,000 jobs alone, at least lift the export ban on nat gas and others. The infastructure is already in place in the Houston ship yards. That at least is a no brainer from our wonderful left and right political heros ;)
Once the export ban is lifted, the Kock boys get their XL pipeline.
"There is not enough U.S. refining capacity for all the so-called light tight oil produced from U.S. deep shale formations which have been the mainstay for domestic oil production growth.
... selling that oil to foreign refineries would mean that the United States would have to import more of other heavier oils (for which we have adequate refinery capacity) to make up for the light oil that is exiting the country."
Couldn't you allow them export their excess product, while still allowing US refineries to run at full capacity? The price might go up for US refineries, but we wouldn't need to import any additional oil as result of exporting the extra quantity.
can we also lift bans on importing lumber, butter, meat, wine etc as well.
'catastrophe [ - ] begins [ - ] with [ - ] apriorism [ - ]'
fill in the blanks playing geopolitic 'scrabble' with ::
'war (?begins?bonus ) with (a) peace (axtra bonusdividend)'
apriorism - The idea that some knowledge of the physical world can be derived logically from general principles
free enterprise cures all evils....
Good luck in finding it...
Currently, American oil is slightly cheaper than oil in the international market. At yesterday's close, West Texas Intermediate was $44.63/bbl, Brent was $48.14, about 8% higher. If oil can be exported, the price of American oil should rise, and the price of oil on the international market should fall. But the move should be $2-$3/barrel, which is practically a daily move in the current oil markets.
Note that there is no ban on exporting finished, refined products. The US exports diesel, kerosene, gasoline, etc. Ultimately, lifting the ban will do little.
Doesn't that assume that markets are not rigged?
Remember how the Saudi leadership and entourage just visited? Gee, ya suppose some strategic choices were made at that time?
This whole 'oil scare' is rubbish the abundance is real enough. But even if it were not (which is certainly not the case) most vehicles can run on nat-gas economically anyway, plus coal is also readily turned into gas economically. Which implies vast repositories of cheap energy to come for a very long time to come. There are many projects doing it all over the world right now. The west has far more economically extractable and deliverable energy in the ground than almost anyone realizes yet.
Plus engine oils can be 100% synthesized. Most cars today have either mostly synthetic blends, or a fully synthetic oil within their engine. Synthetic means human-made oil. Almost no one uses old school mineral oil (crude oil fractions) in modern engines any more. About the only time mineral oil is used is to run an engine in, and they only use mineral oil then because it is a far worse lubricant then synthetic oils, and the extra wear level allows the piston rings to bed into the bore of the engine cylinders during initial wear in of the engine. But once you put synthetic oil in the engine, the wear simply stops almost completely. fatigue of metal still occurs of course, but metal on metal contact simply doesn't happen anymore if you keep to a regular synthetic engine oil change schedule. So we have no problem with oil either.
The people who perpetually trawl the internet with this end-of-world and death-of-economy doom fiction, are just yanking everyone's chain all the time. And what the US is demonstrating is that the supposed addiction to ME oil was a strategic choice all along. Humanity has real problems, but economic bulk energy supply, for a global civilization, is not one of them.
Oil is a controlled substance; they know how to use Tesla's technology and nuclear fission to produce enough electricity at very minimal cost to everyone, but where is the profit in that other than to mankind, which the PTB are not interested in. God is right about all he has said about man's inherit disposition/nature. Rotten to core.
Come off it, if it were so, someone would be using it now. Stop with the baseless fantasizing drivel, it's moronic tosh.
The fact is energy is extremely abundant now, and accessible, and entirely affordable.
(look at the scale down the bottom of that image)
Yes, unfortunately all that energy is in a form that is not very accessible.
LMFAO!!! Like you said " Stop with the baseless fantasizing drivel, it's moronic tosh."
If it were not 'very accessible' it would not be currently getting mined and exported at the highest volumes in the world moron. It is as accessible as it needs to be, at high grades in spectacular abundance, and anyone who wants it supplied can get it delivered, in bulk, economically, to their market, reliably, for centuries.
You, LawsofPhysics, are talking out of your butt doom-boy.
"They say that the first casualty of war is truth"; what is truth...anyone care to answer that?
-------------------
Global warming caused by man...for the fools who buy that, then ask if a Tesla device and nuclear fission are readily accessible (equates to a CHEP solution) and more than enough food, water, shelter, medicine for the entire world with plenty left over is available and it is, then why is it withheld and all we can do is produce human suffering? It is the LOVE of money.
You're a bullshit artist croc, and you don't know what you are talking about, and you talk shit about 'truth' and 'deception'! While talking complete nonsense to deceive, and self-deceive.
Either grow up, or stop trolling, or both.
I could 'solve' your imaginary flim-flam 'problem' of oil price and its availability, in literally a few hours. There is not actually an insoluble problem here, for a practical man, it's simply a matter of choice and will. If you can't even see that you're just not thinking straight.
I never understood why a country would allow raw commodities to be shipped to another country before first adding value to it by processing and manufacturing goods.
Does McDonald's sell beef cattle they raise to other countries or do the sell a finished product.
Look at farmers why in the hell don't they process their crops themselves, may require a collective, but at east they can cut out the middle men.
But wasn't the price shock Kissingered to give us petrodollars?