US Entering Oil Export Market May Faze Supply
From Saudi Gazette
Signals from Washington are getting clear. A new variable – the US crude – may soon be entering and indeed impacting the global crude markets. The US government is reportedly considering doing away with a four-decade-old law that bans the sale and export of American oil abroad. The ban was put in place in reaction to the Arab Oil Embargo of 1973.
Today the US is producing 10 percent of global crude oil supply, but exports precisely zero barrels because of the ban. Things have definitely changed. Net oil imports have already fallen to about 5 million barrels a day from a peak of almost 13 million barrels in 2006. Some say, the US may altogether stop importing oil by 2037 as abundant domestic crude supplies, including North Dakota’s Bakken field and Texas’ Eagle Ford formation, may push production to the level of consumption, according to the US government. The US Energy Information Administration (EIA) says that within 23 years the world’s largest economy may become energy independent, while demand for crude is expected to be modest.
“This is the first time the Annual Energy Outlook has projected that net imports’ share of liquid fuels consumption could reach zero,” Bloomberg quotes John Krohn, a spokesman for the EIA.
The Paris-based International Energy Agency too predicts the US will become the world’s largest oil producer by 2020, and could be energy-independent by 2037.
The change in scenario is forcing Washington to waver somewhat on its stance on the issue. After staying on the sidelines for some time now, the Obama administration seems finally warning up to the idea of permitting American oil abroad,. The administration is seriously considering changing federal laws to let oil flow abroad, the US Energy Department Secretary Ernest Moniz said in Seoul last week.
“The issue of crude oil exports is under consideration…a driver for this consideration is that the nature of the oil we’re producing may not be well matched to our current refinery capacity.” Moniz said at the end of an energy conference in Seoul, as reported by the Wall Street Journal.
The statements, paired with similar comments by senior Obama counselor John Podesta, mark a notable policy shift inside the administration over the past six months.
“We’re taking an active look at what the production looks like, particularly in the Eagle Ford in Texas, and whether the current refinery capacity in the US can absorb the capacity increase to refine the product that’s being produced,” Podesta told a crowd at the Columbia University’s Center on Global Energy Policy a week earlier.
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