Western Railroad Discussion > House votes to lift crude oil export ban

The Wall Street Journal reports that the House of Representatives has voted to remove the ban on exporting most US sourced crude oil.  This woul likely be a major boost to US railroads and pipelines.

Fate uncertain in the Senate, and the administration appears uncertain to embrace a full out export lift.  There has been tentative movement with executive orders on lightly processed condensate but no support for a removal.  US exports of crude to Canada and Mexico would apparently not be changed.  The article notes that about 5% of US oil production is exported to Canada.

There's been an unusual series of players. The refiners oppose the change, which would increase their input costs.  The environmental groups join them, seeking a transition to a global fossil fuel free world..  The big oil companies tend to favor all out removal, as do the oil tanker companies and their unions.


Export ban?

Lackawanna484 Wrote:
-------------------------------------------------------
> The Wall Street Journal reports that the House of
> Representatives has voted to remove the ban on
> exporting most US sourced crude oil.  This woul
> likely be a major boost to US railroads and
> pipelines.
>
> Fate uncertain in the Senate, and the
> administration appears uncertain to embrace a full
> out export lift.  There has been tentative
> movement with executive orders on lightly
> processed condensate but no support for a
> removal.  US exports of crude to Canada and
> Mexico would apparently not be changed.  The
> article notes that about 5% of US oil production
> is exported to Canada.
>
> There's been an unusual series of players. The
> refiners oppose the change, which would increase
> their input costs.  The environmental groups join
> them, seeking a transition to a global fossil fuel
> free world..  The big oil companies tend to favor
> all out removal, as do the oil tanker companies
> and their unions.
>
>
> Export ban?

Yes... and see the price skyrocket. This is what the oil companies want.

J.

Domestic supply drops - Domestic demand stays the same - Guess where the price goes and guess who pays for it?

J.Ferris Wrote:
-------------------------------------------------------
(snip)
>
> Yes... and see the price skyrocket. This is what
> the oil companies want.
>
> J.

Yes, and what the chemical and refining companies don't want.  It raises their input costs.  The US and Canada are "islands" in the world energy market, with only limited need for energy imports and exports

gas went up 6cents today here in south jersey ...

The US is a net oil importer. How does that work?

Posted from iPhone

Lots of comments on this thread regarding oil supply and price.  It has been decades since the US has produced sufficient oil for its domestic needs and the same is still true today.  Domestic oil resources are mostly in formations that require fracturing, and thus we are a high cost producer, especially relative to producers like Saudi Arabia.   In addition, these reservoirs require that new wells be drilled almost continuously in order to maintain production levels as the production decline rates are very high.  Due to Saudi Arabia producing at maximum rates for the last year, the world and domestic oil price has been driven down below the point where drilling for domestic oil is only profitable in a few areas.  Areas like the Williston Basin of Montana and North Dakota, and the Eagle Ford area of South Texas are barely marginal at today's prices, and so production from those areas is declining as drilling new wells has virtually ceased.   

So long as oil prices were high enough to allow companies to develop domestic supplies there was the potential need for this legislation as production increases seemed to appear that the time would come when domestic production would actually supply all of the domestic needs.  This probably would have happened, had Saudi Arabia not decided that the threat of the US actually becoming a net exporter of oil, was more than they could deal with, as US exports would threaten traditional Saudi Markets in  Europe as well as force traditional US suppliers to sell to the European market as well.

However, should prices again rise to the point where domestic drilling increases US production to the point where it approaches or even exceeds US needs, this legislation will allow to US producers to continue the boom by selling US crude oil abroad.     Thus the result of this legislation will not be be an increase in the pump price of gasoline, but, should prices rise (and gas prices go up again) due to the world market for crude oil, it may help insure a stable domestic supply of oil which will keep us from being at the mercy of producers like Saudi Arabia.  

 

One more thing, the largest beneficiaries of higher oil prices are the various local, state and even the federal government, not so much the oil companies.  Despite what the tax signs say on your gas pump about the amount of federal gasoline tax, the hidden taxes on each gallon of gas far exceed the actual direct state and federal taxes which are posted on the pump.  

fbe Wrote:
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> The US is a net oil importer. How does that work?
>
> Posted from iPhone

The oil companies continue to import oil to fill demand and to keep
the prices high!

Now that Congress has ended the export ban, then domestic prices will go even higher
as they sell US/Canadian oil overseas!

Just another way to artifically inflate the gas prices in the US!!

Mike

Just to note that "Congress" has not lifted the ban on exports.  The House passed a bill to do so.  Whether the Senate and the President go along is uncertain.

In addition to the various taxes and fees leveled on crude and processed fuels along the way, the feds and states have created at least 45 various regional blends of fuel. So, gasoline produced in one refinery may not be sold 20 miles away, in a different region with a different formulation. The result is a comfortable duopoly or triopoly where just two or three refineries divide up a several state region. No gas can come in, so they control the supply. The restriction is enforced by the feds and by the states.

The US is divided into this patchwork of regions to address regional pollution and ethanol concerns. But it has worked to the profit of the refiners.

If you're interested in knowing more, you can research the issue.  This GAO study is a good overview.

This GAO study on 45 mandated US gasoline blends

You cannot predict how this sitting president will go as to what happens with fuel prices is not something any back there tend to care about. Natural gas prices if shipped to other countrys will cause the domestic prices to rise affecting everyone in the US some way. But the cry by those who want it is it will creat jobs. Yes it will but few after all is in place to get it to port. That is the reality down stream and those who didnt get jobs or keep them will see there net income eroded by higer prices.

I expect the embargo to be lifted, but in stages.  What's likely to happen next is increased exports of condensate and NGL's (liquid propane, butane, ethane), plus expansion of the new agreement with Mexico. 


Allen