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Energy Secretary: time to revisit US ban on crude exports [updated]

The views expressed are those of the author and are not necessarily those of Scientific American.

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The US might reconsider its ban on crude oil exports. Speaking at the Platts Global Energy Outlook Forum in New York on Thursday, Energy Secretary Ernie Moniz explained that export ban dates from a period of oil embargoes and supply disruptions from the 1970s.

“Those restrictions on exports were born, as was the Department of Energy and the Strategic Petroleum Reserve, on oil disruptions. There are lots of issues in the energy space that deserve some new analysis and examination in the context of what is now an energy world that is no longer like the 1970s,” said Moniz.

These remarks echo the growing calls from industry to open up American crude oil to the global oil market.

From an energy security perspective, lifting the export ban could give the US another knob to twist in reaction to supply disruptions or unrest abroad (think Syria, Libya, etc) or flexibility to soften the impacts from cutbacks in Saudi Arabia’s production.

Blake Clayton, an adjunct fellow at the Council on Foreign Relations, argues that lifting the ban would be good for the US economy:

Crude oil exports could generate upward of $15 billion a year in revenue by 2017 at today’s prices, according to industry estimates. Those gains would be partially offset by displacing some refined product exports, however. Today’s export restrictions run the risk of dampening U.S. crude oil production over time by forcing down prices at the wellhead in some parts of the country. Letting drillers reap extra profits from selling crude oil overseas, if the market dictates, would provide greater incentives for drilling, stimulating new supply. It would also encourage investment in oil and gas production in the United States rather than abroad. In oil-producing regions, more workers would be hired for oil exploration and production, as well as for local service industries.

Taken together with natural gas, the US is awash in domestic fossil fuels that are largely stranded in North America, and is now in a position to reconsider its scarcity-based energy policies.

UPDATE #1: looks like Sen. Lisa Murkowski wants to take up the debate on the export ban (via The Hill):

Murkowski plans to release a white paper on the pros and cons of opening the country’s export policy on crude, one of her top aides told The Hill.

“Sen. Murkowski believes the debate on energy exports is coming sooner rather than later,” said Robert Dillon, an aide to the senator, who sits on the chamber’s Energy and Natural Resources Committee.

“The debate has been centered on natural gas, and she wants to switch it to oil.”

“It is another opportunity for our country economically, and certainly her position will become clear” when the report is released,” Dillon added.

UPDATE #2: Some clarifying statements from DOE.

DOE Press Secretary Bill Gibbons: “As the Secretary made clear, this is an issue under the purview of the Department of Commerce, not the Department of Energy.”

And a clarifying statement on background of the Secretary’s statements from a DOE rep via email: “More broadly, the Secretary was simply referring to how the energy landscape of today is substantially different from the 1970′s in the wake of the oil embargo. The Secretary was responding to a question as to why natural gas and oil are treated differently with respect to exports, and he also noted that the history of natural gas and oil are very different.”

David Wogan About the Author: An engineer and policy researcher who writes about energy, technology, and policy - and everything in between. Based in Austin, Texas. Comments? Follow on Twitter @davidwogan.

The views expressed are those of the author and are not necessarily those of Scientific American.

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  1. 1. Uncle.Al 2:44 pm 12/13/2013

    Suppose Louisiana salt dome solution-mined Strategic Petroleum Reserve huge storage volumes – Officially filled with Saudi sweet crude purchased at top dollar price – were instead filled with refinery still bottoms and other nasty wastes carefully never to be tapped.

    Somebody should drop a wine thief on a thousand foot line in there, and observe whether it makes it below the “petroleum’s” surface. Things may have cooled and hardened over the intervening decades.

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  2. 2. outsidethebox 4:08 pm 12/13/2013

    It is hardly a surprise that this administration would want to export oil and gas. If the fuel couldn’t be exported prices would necessarily drop and the “unicorn solutions” like solar and wind would go exactly nowhere. Better Americans suffer along with the economy than that happen.

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  3. 3. drafter 4:18 pm 12/13/2013

    I’d be for exporting as long as we charged others a small premium and all those monies went to pay down the debt and once the debt is payed off, it never will even with this since they the fed will just spend more, they could apply the excesses to the other needed items or lower our taxes. Of course none of that will ever happen with either political party in power

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  4. 4. Owl905 1:06 pm 12/14/2013

    Prices will end up revolving around the world market price. The question is the rate of exploitation. Opening up exports will spur greater exploitation in the short term. For the U.S., the ‘low-hanging fruit’ is Canada, Mexico, and the Caribbean. The loser in the competition will be Venezuela. That provokes interesting speculations on the consequences, but appears to favor the value of exporting beyond the trade-deficit offset: the $17billion a year is significant but only puts a little dent in the $500billion annual impbalance.

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  5. 5. jerryd 6:59 am 12/15/2013

    A very dumb idea which will drive prices up.

    But we don’t even make 50% of our oil needs now so any exported would have to be imported first!!!

    We do this now but the export is refined products. Doing it with crude makes no sense.

    Home and building RE are already cheaper than FF’s so oil, coal’s price doesn’t matter if they get higher or lower as home/building RE costs less than Utility’s overhead at $.04/kwhr for well done PV. sunelec for kits/parts and local electrician to install on grid for about $2k/kw making over 40,000kwhrs US average.

    And soon many other energy catchers, makers for consumers will make FF’s too expensive as even more cost effective than PV!

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  6. 6. jadamone 3:41 pm 12/19/2013

    In April of 2008 the USGS gave us a solution to our National Debt when they testified before the U.S. congress that the U.S.A. has around 3 Trillion barrels of oil, mostly on uninhabited government land, in Wyoming, Utah, and Colorado. It is called the Green River Formation, . The USGS claims that we can recover half of this now with our current technology. Since the rest of the Earth’s known reserves is around 1.23 Trillion barrels it appears that we could use this resource to pay our debts and undermine the power of all our oil rich enemies. This resource is worth around 150 Trillion dollars and is being ignored by our Politicians.

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