Posted on 01/06/2015 2:56:07 PM PST by Lorianne
The decision by president Barack Obama to open the door to US oil exports seeped out of Washington in a low-key manner last week, but the impact could be as explosive as a New Years Eve firework display.
The ban imposed after the Middle East oil embargoes in the 1970s has made it close to impossible to ship abroad the fruits of Americas shale bonanza. It also long looked wrong-headed in the home of free trade.
The US department of commerce quietly overturned the four-decade-old policy by saying it had started to approve a backlog of requests to sell processed light oil to foreign buyers. The issue is tremendously sensitive, which is possibly why the announcement came out at a time of year when most policymakers were still at home enjoying the Christmas holidays with their families.
Many manufacturers and many domestic consumers are totally opposed to domestic oil or gas production being exported, on the grounds that it could bring an end to cheaper local energy supplies and competitive advantages. But prospectors from the shales in Eagle Ford, Texas and Marcellus, Pennsylvania have been campaigning in Washington for a change in the law for some time, their calls growing more urgent now that some face potential financial trouble as the price of oil plunges from $115 per barrel down to $56.
Meanwhile American oil sometimes sells at $15 per barrel less on the local market as supply exceeds demand: not good for the frackers already burdened by their relatively high-cost operations.
But by opening the door to exports of slightly refined products Washington has struck a more serious blow to its export rivals in Saudi Arabia, Russia and elsewhere.
(Excerpt) Read more at theguardian.com ...
All the commie countries rely on the price of oil being high to keep their ‘utopias’ going. I think it’s great that our private sector is sticking it to ‘em
Obama did not open up exports. Only for natural gas liquids, which were already permitted.
Unless I missed something.
U.S. opening of oil export tap widens battle for global market
“Obama did not open up exports. Only for natural gas liquids, which were already permitted.”
The article was unclear. It indicated that the initial export would be slightly refined products. Previously, only highly refined products could be exported. No crude was exported. But allowing crude exports gives the shale producers a wider market and more markup, which eases their debt burden caused by the current price drop.
The current drop is caused exclusively by Saudi Arabia and I believe it is intended to force the Russians to stop supporting Assad in Syria. It has caused major damage in Russia. I suspect this is Obama’s attempt to put more pressure on Russia. In which case, assuming Russia caves, we’ll see the export restrictions come back. If Russia doesn’t cave, then we’ll be one of the largest combined energy exporters and it will save many of the shale companies which were close to bankruptcy.
The current price drop, while not eased by the Saudis is simple oversupply.
China has not been buying diesel in particular to match its suppoed economic growth. This is curious. Indicates to me that they are not really growing. Europe is also stagnant. Finally bidi and Malaysia removed price support for diesel that resulted in decreased demand.
Now yes Saudi is not fixing things, but didn’t cause it. And their targets are Iran and Russia, not Texas.
Oil is selling lower than cost of production. It’s a bit of a bubble and won’t stay. It’s also a sign that the world economy is sickly. While we all might like cheap gas, it’s a better sign when oil is in the mid 80S or low 90s
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