As politicians from oil-producing states work to draw up bills to end the ban on oil exports, Mexican officials are “confident” that the country will soon be importing American crude through a backdoor loophole in the law.
Back in January, Mexico applied for a crude swap that, if approved, would allow the U.S. to export 100,000 barrels of oil per day to Mexico. This would be unrefined crude — refined products such as diesel and gasoline are not subject to the ban — likely from the Eagle Ford and Permian shale fields, where fracking has produced a glut of light, sweet crude in recent years.
Though the crude oil export ban has been in place for about four decades, it allows for certain exemptions to be permitted. Exports to Canada, for instance, are allowed, so long as the oil will be processed and consumed in Canada. And last year, Commerce Department officials in the Obama administration approved the export of condensate, an extremely light and gassy form of oil that can be minimally processed in the field without any trip to a refinery.
Condensates are already flowing heavily out of Texas shale regions, and since permission was granted last November, there’s been a rush of condensate exports to Mexico.
If the crude swap is approved, it’ll open up another loophole to the export ban for crude to flow through.
Very few exceptions have been made to the ban since it was implemented as a response to the Arab oil embargo in 1973.Exports are allowed to Canada “for consumption or use therein,” and very limited exports are allowed from Alaska.
Last September, Alaska shipped off its first crude export in over a decade.
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