Posted on 12/24/2014 5:24:19 AM PST by thackney
With the U.S. experiencing a period of rapidly increasing production of light tight oil (LTO) and Gulf Coast refining configurations geared toward processing medium and heavy crude, a growing chorus is calling for the end of the ban on US crude exports. The concern is, due to the medium/heavy orientation of the US refining sector, LTO will continue to be sold at a discount to foreign light oil prices (Brent). This discount will grow as increased LTO production is faced with growing refining bottlenecks and, eventually, will restrict LTO production in the U.S. Moreover, the issue becomes even more relevant particularly as oil prices retreat, largely because the barrier to trade limits fungibility and, as a result, could further hinder investment capital into the domestic upstream in a lower price environment.
However, voices sympathetic towards the oil ban can also be heard, especially of those concerned with retaining the high profitability of refineries with greater light oil capacity. Because refined product prices (including gasoline) reflect global crude prices, U.S. refinery margins, particularly for those buying U.S. LTO, have significantly increased. To bolster its anti-oil export position, a small group of refiners who formed Consumers and Refiners United for Domestic Energy, or CRUDE, has recently commissioned a study, “An Analysis of U.S. Light Tight Oil Absorption Capacity”, by Baker & O’Brien (B&OB) to analyze the ability of the U.S. refining sector to process increasing amounts of LTO. The study concluded that “The U.S. refining system is expected to have capacity to process all the LTO that will be produced for the remainder of this decade,” assuming production estimates in the EIA 2014 Energy Outlook. Thus, the study implies, there is no need to end the ban on oil exports.
(Excerpt) Read more at forbes.com ...
What we need is a tariff on foreign oil of $20 per barrel to protect our young fracking industry. To protect American jobs and investments that could go bankrupt while Saudi Arabia is pumping all out.
And to the libertarian tariff haters. Drop dead!
No!
No new taxes.
Don’t punish US Refineries and PetroChem industries. Do not make them less economic than the same business in other countries.
Do not request the government to select industry winners and losers.
Young? The US oil & gas industry has been hydraulic fracturing since the 1940s. It has survived many previous down turns in price before this.
Then prepare to see many frackers go bankrupt with the new Saudi oil pricing. You wipe out a generation of frackers and it will take time to gear back up when oil is back at $100.
BTW what percent of world oil trade is done via long term contract such as China likes to do? Thanks!
The US currently imports ~7 MMBPD of oil. We don't need to raise our prices to refine above the rest of the worlds. We need those jobs as well.
what percent of world oil trade is done via long term contract
I've read such generic descriptions for longer term contracts like "a lot" and "much" for the industry, but I have not found any reliable source that compares it. That information is not part of the required reporting data to the Department of Energy, like production, drilling, etc is gathered.
7 in 10 U.S. oil companies have contracts in place locking in prices at around $90 a barrel through 2015
Lower oil prices and debt combine to create a squeeze
http://www.houstonchronicle.com/business/energy/article/Lower-oil-prices-and-debt-combine-to-create-a-5939341.php#/0
December 6, 2014
“What we need is a tariff on foreign oil of $20 per barrel to protect our young fracking industry. To protect American jobs and investments that could go bankrupt while Saudi Arabia is pumping all out.”
the best way to distort and market is to tax it the way you suggest.
let the market work and consumers will benefit.
Screw the feminized consumer economy. I want a guy oriented producer economy. An intelligent nation protects its producers by tariffs if needed. A degenerate nation of borrowers describes our present consumer oriented economy.
IOW your economics textbooks are wrong
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