Companies seek new ways to export oil from US as production booms
26 June 2014
Companies are now using new ways to export oil from the US despite government restrictions, and in the process helping the US become a bigger global exporter of petroleum AP reported.
The Obama administration is looking to raise exports even as it keeps the policy unchanged by defining some light oils as petroleum products like gasoline or diesel, exports of which are restricted.
Though US production has shot recently, crude oil consumption outstrips imports leaving the country heavily dependent on imports.
However, the crude being produced by US drillers in recent years includes types of oils that do not have a big domestic market, which has led to the oil industry and some politicians calling for an end to crude export restrictions, which adopted after the 1973 Arab oil embargo.
There is a general agreement among economists that lifting the restrictions would benefit the US economy; however the ban remains a hot topic due to the unfounded fear, according to most analysts - that lifting the ban on exports would raise gasoline prices for US drivers or compromise US energy security.
According to most experts, the restrictions would not be withdrawn this year due to the coming midterm elections.
Meanwhile, with US production of light crude oil continuing to boom, some companies and lawmakers are calling for the US to reform its decades-old ban on most US crude oil exports - a policy that was put in place in the wake of the Arab oil embargo of the 1970s Reuters reports.
With US officials clarifying that a type of ultra-light crude known as condensate could be exported, after enough processing, a breakthrough might be on the cards, according to commentators.
The limits of the ban could also be tested through the swap route.
While theoretically it would just take two weeks for Washington to let oil producers execute a deal, as swaps were allowed by law, however, according to analysts, meeting the base requirement - that the imports be of the same quantity and quality as the exports was easier said than done.
Under the current law there was no clear definition of quality, as for instance whether a heavier crude like the one produced by Mexico was of higher quality because it was compatible with US refining capacity, or lower quality because of its density.
Reuters quoted Kevin Book, policy analyst at ClearView Energy Partners as saying that ensuring that the crude swapped was of the same quantity and quality as crude swapped out, which was a loose paraphrase of one of the regulation's many stipulations, might be non-trivial.