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Congress ended the U.S. crude oil export ban last week. There is apparently no longer a strategic reason to conserve oil because shale production has made American great again. At least, that’s narrative that reality-averse politicians and their bases prefer.

The 1975 Energy Policy and Conservation Act (EPCA) that banned crude oil export was the closest thing to an energy policy that the United States has ever had. The law was passed after the price of oil increased in one month (January 1974) from $21 to $51 per barrel (2015 dollars) because of the Arab Oil Embargo.

The EPCA not only banned the export of crude oil but also established the Strategic Petroleum Reserve. Both measures were intended to keep more oil at home in order to make the U.S. less dependent on imported oil. A 55 mile-per-hour national speed limit was established to force conservation, and the International Energy Agency (IEA) was founded to better monitor and predict global oil supply and demand trends.

Above all, the export ban acknowledged that declining domestic supply and increased imports had made the country vulnerable to economic disruption. Its repeal last week suggests that there is no longer any risk associated with dependence on foreign oil.

What, Me Worry?

The tight oil revolution has returned U.S. crude oil production almost to its 1970 peak of 10 million barrels per day (mmbpd) and imports have been falling for the last decade (Figure 1).

Figure 1. U.S. crude oil production, net imports and consumption. Source: EIA and Labyrinth Consulting Services, Inc.
(Click image to enlarge)

But today, the U.S. imports twice as much oil (97%) as in 1974! In 2015, the U.S. imported 6.8 mmbpd of crude oil (net) compared to only 3.5 mmbpd at the time of the Arab Oil Embargo (Table 1).

…click on the above link to read the rest of the article…

Report: Eagle Ford Shale Has Peaked, Lifting of Oil Export Ban Could Drain Field More Quickly

December 18, 2015

Report: Eagle Ford Shale Has Peaked, Lifting of Oil Export Ban Could Drain Field More Quickly

Titled “Eagle Ford Reality Check: The Nation’s Top Tight Oil Play After More Than a Year of Low Oil Prices,” the report is the latest in a series of long reports on the overhyped future of oil obtained via hydraulic fracturing (“fracking”) in the U.S. by Post Carbon Institute Fellow David Hughes. Hughes formerly worked for 32 years with the Geological Survey of Canada as a scientist and research manager before coming to Post Carbon.

It also comes just two months after Post Carbon’s October release of a similarly titled report on North Dakota’s Bakken Shalebasin, the second biggest shale oil field in the U.S. behind the Eagle Ford.

“In Eagle Ford Reality Check, David Hughes…looks at how production in the Eagle Ford has changed after a year of low oil prices,” a summary of the report explains. “Oil production in the Eagle Ford is now falling after more than a year of low oil prices. The glory days of the Eagle Ford are behind it, at the ripe old age of six years.”

Many of the same themes and concepts, for those familiar with Post Carbon’s previous “shale bubble” updates, reappear in this report. Those include the drilling treadmill, drilling sweet spots, and U.S. government and industry drilling productivity assessments (the seeds and intelligence upon which energy policymaking is made) vs. independent drilling productivity assessments.

…click on the above link to read the rest of the article…

American Petroleum Institute Touts Oil Exports to Fend Off Iran, Russia Despite API Members Tied to Both Countries

September 21, 2015

American Petroleum Institute Touts Oil Exports to Fend Off Iran, Russia Despite API Members Tied to Both Countries

The American Petroleum Institute (API) has launched a new advertising campaign in its ongoing push to oust the U.S. oil exports ban in place since 1975.

One of the most recent ads, titled “Crude Oil Exports and National Security” on YouTube, starts off with ominous music and asks, “Who loves the ban on U.S.crude oil exports?” The answer, says API, is “Iran and Russia, not exactly our best friends.”

Not mentioned: both countries currently maintain business ties with API‘s dues-paying members.

The ad, reported the Houston Chronicle, aired in Colorado, Florida, Illinois, Indiana, New Mexico, New York, New Jersey, Pennsylvania, Virginia, Maryland, West Virginia and Washington.

API has also launched a new website dedicated to pushing oil exports, OilAndExports.com, which makes the case for exporting U.S. oil. And two API front groups, both Energy Citizens and Energy Nation, have also published petitions calling for congressional offices to lift the ban.

The push by the industry’s most powerful lobby comes as rumors have swirled about the potential for a merger betweenAmerica’s Natural Gas Alliance (ANGA), the hydraulic fracturing (“fracking”) industrial complex’s lobby, and API.

It also comes as the U.S. House of Representatives, led by a Republican Party majority, just passed a bill to end the oil export ban.

API is not alone in pushing the oil exports to fend off Iran message, with the industry-funded Producers for American Crude Oil Exports and the Domestic Energy Producers Alliance (DEPA) also disseminating their own similar commercials.

DEPA, created by Harold Hamm — Continental Resources CEO and 2012 Republican Party presidential candidate Mitt Romney’s energy advisor — has also created its own website advocating for lifting the ban at LiftTheExportBan.com.

…click on the above link to read the rest of the article…

Truth takes a hit in the battle over U.S. oil export ban

September 13, 2015

Truth takes a hit in the battle over U.S. oil export ban

They say that the first casualty of war is truth. And, on both sides of the fight over lifting the ban on exports of U.S. crude oil, the truth has already fallen into a coma. The ban was instituted in 1975 in order to make America less subject to swings in international oil supply after suffering the price shock associated with the Arab oil embargo in 1973.

Last week a committee in the U.S. House of Representatives voted to end the ban after a Senate committee voted in July to do the same. A vote by the full House and Senate could be near.

The proponents are careful NOT to say that the United States is energy-independent and so has oil to spare. Such claims made in the past backfired because it is too easy to look this up. Net U.S. imports of crude oil were almost 7 million barrels per day (mbpd) in the week ending September 4. That’s out of about 15.6 mbpd of liquid fuels consumed domestically.*

Yet, it is this state of affairs that the proponents of lifting the export ban label as “abundance.” Here’s the relevant quote from the website of the Domestic Energy Producers Alliance (DEPA), a consortium of U.S. oil drillers: “Thanks to the genius of America’s independent oil and natural gas producers, the world is moving from a concept of ‘resource scarcity’ toward ‘resource abundance.'” (So, the world is not moving toward actualabundance, just the concept of abundance. But, I’m nitpicking.)

In another piece entitled “From Scarcity To Abundance: Why The Strategic Petroleum Reserve Is Unnecessary” the group is more bold, saying that the supposed “abundance” is right here in the United States:

…click on the above link to read the rest of the article…

EIA On Board With Lifting U.S. Crude Export Ban

September 4, 2015

EIA On Board With Lifting U.S. Crude Export Ban

A new report from the Energy Information Administration adds more weight to the notion that crude oil exports from the U.S. would not damage the economy.

The EIA studied the prospect of oil exports in response to questions from Congress, and it builds on several prior reports completed by the agency over the past year and a half. The report is full of caveats and other drawbacks, but the headline takeaway could fuel political momentum to remove the export ban.

According to the results, the EIA believes that if U.S. oil production remains below 10.6 million barrels per day through the next decade, there would be few differences between leaving the export ban in place versus removing it. If production is set to rise beyond that level, however, removing export restrictions would have several effects: higher domestic oil production, higher crude exports, slightly lower gasoline prices, but also lower refined product exports.

Digging into the findings, the EIA says that if the export ban stays in place it would have the effect of maintaining the current discount at which WTI trades relative to the Brent crude marker. Moreover, if U.S. oil production increases, the spread between WTI and Brent would only widen, perhaps as high as $10 per barrel under one scenario. And that spread would increase in corresponding fashion the more U.S. oil production increases.

Of course, removing the export ban would shrink that spread, allowing for higher oil prices at the wellhead for American oil and gas drillers. That would incentivize more drilling, leading to higher oil output than would otherwise occur under the export ban.

…click on the above link to read the rest of the article…

Lifting Ban On U.S. Crude Oil Export Would Enable Massive Fracking Expansion

August 11, 2015

Lifting Ban On U.S. Crude Oil Export Would Enable Massive Fracking Expansion

In a recent Washington Post editorial supporting oil industry efforts to lift the existing ban on exporting crude oil produced in America, the editors stated:

“The most serious objection to lifting the ban comes from environmentalists who worry that it would lower fossil fuel prices and lead to more oil consumption.”

And then they make the case that this is actually a positive as there may be some negotiations that result in support for “energy research funding, efficiency programs or, in an ideal world, a charge on carbon dioxide emissions to the package could balance its possible effects on the environment.”

In an ideal world, the climate wouldn’t be changing either. But we don’t live in an ideal world, do we? And the oil industry usually gets what it wants and environmental concerns go by the wayside regardless of who is in the White House. See arctic drilling permits for recent proof.

Existing Export Ban Limits Ability of Fracking Industry to Expand

The reality is that lifting the oil export ban will result in large increases in fracking for oil in the U.S.

At the annual Energy Information Administration conference in Washington, D.C. in June, Harold Hamm, CEO of fracking giant Continental Resources, presented a slide that predicted oil production could reach 20 million barrels per day by 2025 if the crude export ban is repealed.

That is a massive increase over the existing amount of oil produced by fracking (aka “tight oil”) in the U.S. Tight oil current accounts for approximately half of the 9 million barrels a day of oil produced in the U.S. To get to Hamm’s predicted production levels that means a doubling or tripling of the scale of the current tight oil fracking industry.

…click on the above link to read the rest of the article…

Low Prices Driving Record U.S. Crude Oil Exports Despite Crude Oil Export Ban

January 21, 2015

Low Prices Driving Record U.S. Crude Oil Exports Despite Crude Oil Export Ban

“Are you more desperate to get a better deal when you’re poor? I guess you are.”

That was John Auers, executive vice president of oil industry consulting firm Turner Mason & Company, describing the oil industry as being “poor” and “desperate” to Bloomberg.

As the oil industry cries poverty due to low oil prices in an effort to justify its attempts to lift all restrictions on exporting crude oil produced in the U.S., it is helpful to remember that this is an industry that was demanding tax breaks for oil production even when, in 2013, the top 5 companies made a combined $93 billion in profits. In just the second quarter of 2014 alone, a year of poverty and desperation, as the industry tells it, ExxonMobilmade $8.8 billion in profit.

The “better deals” that John Auers was talking about are to be found on the global market, which technically isn’t open to those “poor” U.S. crude oil producers due to the crude oil export ban. Crude oil that is produced in the U.S. is worth more if it is sold on the world market than if it is sold in the United States.

…click on the above link to read the rest of the article…

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