Obama Administration Eases Restrictions on Exports of Lightly Processed Oil for First Time Since 1970s

Friday, June 27, 2014
(AP photo)

Not since the OPEC oil embargo of the 1970s has the United States exported crude oil to other countries. But the Obama administration, in a small but not insignificant move, has authorized two modest sales by U.S. companies involving petroleum that’s been lightly processed to avoid lifting the four-decade old prohibition.

 

With the blessing of the Department of Commerce, which oversees American exports, Pioneer Natural Resources Co. and Enterprise Products Partners are now planning to ship ultra-light oil to foreign buyers.

 

Industry experts say the deals represent a real change in U.S. export policy, even though technically the petroleum is not unrefined crude oil, which hasn’t been sold to overseas interests since the mid-1970s.

 

The White House, though, insists the sales do not mean the administration has shifted U.S. policy on the issue.

 

“As the Commerce Department has said, oil that goes through a process to become a petroleum product is no longer considered crude oil,” spokesman Josh Earnest told the BBC News.

 

Pressure has been mounting from oil companies for the government to lift the ban, now that the U.S. is experiencing a boom in petroleum production, thanks to hydraulic fracturing and how it’s helping to open up shale oil reserves.

 

Some industry analysts believe the two deals will not be the only ones to receive approval from Commerce officials in the coming days.

 

“The flood gates of exports will be opened now,” Ed Morse, an oil analyst with Citigroup, told BBC News.

 

Morse said exports of lightly processed crude could total 200,000 to 300,000 barrels per day by the end of this year, and that this amount could double by next year.

 

Critics of the action, including many environmental groups, believe that the result will be a rise in U.S. fuel prices. Some analysts disagree.

-Noel Brinkerhoff

 

To Learn More:

US Eases Oil Export Restrictions (BBC News)

Companies 'Work around' U.S. Oil Export Ban (by Wendy Koch, USA Today)

U.S. Oil Imports Down, Exports Up (by Noel Brinkerhoff, AllGov)

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