PDA

View Full Version : US spending bill lifts 40-year ban on crude oil exports



Rum_Pirate
12-21-2015, 11:59 AM
I wonder why at this time?


US spending bill lifts 40-year ban on crude oil exports

18 December 2015

From the section Business (http://www.bbc.com/news/business)


http://ichef-1.bbci.co.uk/news/660/cpsprodpb/13901/production/_87292108_gettyimages-80864706.jpgImage copyrightGetty ImagesUS politicians have approved a measure to lift the 40-year ban on crude oil exports.
The move is part of a $1.1 trillion (738bn) spending bill approved by the Senate on Friday that will fund the US government until 2016.
Oil prices rose on Friday following several weeks of falls, as the markets cope with a glut of crude.
US West Texas Crude (http://www.bbc.co.uk/news/business/market_data/commodities/143910/default.stm) gained 1.1% to $36.38 a barrel, while Brent (http://www.bbc.co.uk/news/business/market_data/commodities/default.stm) rose 0.7% to $37.32 a barrel.
US oil producers will now be able to sell crude to the already saturated international market.
The bulk of US oil comes from shale producers. Production and exploration companies argued the ban - imposed during the Arab oil embargo in the mid-1970s - was outdated and unnecessary.
Opponents claimed that lifting the ban would lead to the loss of oil refining jobs and would be bad for the environment.
As a trade-off for lifting the ban, the spending bill includes tax breaks for solar and wind power and a pledge by Republicans not to block a $500m payment to the UN Green Climate Fund.
President Obama signed the bill into law on Friday.
The global glut meant that lifting the ban was not expected to lead to significant US exports for months or even years, but could give producers extra flexibility.
George Baker, head of Producers for American Crude Oil Exports, said: "Now that we have levelled the playing field, the United States finally has an opportunity to compete and realise our nation's full potential as a global energy superpower."
Tom O'Malley, executive chairman of refiner PBF Energy, claimed that lifting the ban would lead at least one oil refinery on the US east coast to close.

"This is a crazy thing to do. Once you lift it, it's hard to reverse it," he said.
http://www.bbc.com/news/business-35136831

mdh
12-21-2015, 12:42 PM
We produce more than we use?

hokiefan
12-21-2015, 12:43 PM
We've sold out to the oil industry. They want to sell their product overseas where people are paying a higher price.

Cheers,

Bobby

RonW
12-21-2015, 12:53 PM
More like they are putting pressure on Putin and hurting russia's profits in oil and gas exportation, there by hurting their economy and it is all part of a global currency war.

peb
12-21-2015, 01:38 PM
We've sold out to the oil industry. They want to sell their product overseas where people are paying a higher price.

Cheers,

Bobby



It us a chance for an American industry to effectively compete in the world. that tends to help workers.

Why is that selling out to the oil industry? explain why a continuation of the ban is best for America.

slug
12-21-2015, 01:49 PM
Its probably both good and bad.

good for jobs and the economy .

the bad is that domestic oil resorces will be depleted faster.

tough call...glad they made it.

Bob Adams
12-21-2015, 05:52 PM
We should be filling the strategic reserve while oil is this cheap, not exporting it.

peb
12-21-2015, 05:53 PM
We should be filling the strategic reserve while oil is this cheap, not exporting it.

How do the two have anything to do with each other.

Paul Pless
12-21-2015, 06:12 PM
I wonder why at this time?


More Obama douchebaggery.

Garret
12-21-2015, 06:15 PM
More Obama douchebaggery.

It was the Republicans in Congress Paul.

@ the "put it in the strategic reserve" post: What? That would be planning ahead. There's a law against Congress doing that. Or so one would think.

LeeG
12-21-2015, 06:51 PM
I wonder why at this time?


http://www.bbc.com/news/business-35136831

That's a good question, maybe you could find an answer.

Paul Pless
12-21-2015, 06:53 PM
It was the Republicans in Congress Paul.

@ the "put it in the strategic reserve" post: What? That would be planning ahead. There's a law against Congress doing that. Or so one would think.

Obama's gonna sign it without reservation.

LeeG
12-21-2015, 06:55 PM
We produce more than we use?

No. We are a net importer and have been for over 60yrs. It was an easy political bone to feed Congress critters without much practical consequences as we already export small quantities of crude that has been slightly processed to meet the definition of product and not crude. Not all refineries can take the kind of oil we're producing at a particular time so it's a way to get oil to customers with a wink and a nod.

LeeG
12-21-2015, 06:57 PM
Its probably both good and bad.

good for jobs and the economy .

the bad is that domestic oil resorces will be depleted faster.

tough call...glad they made it.

It's good in that acknowledges what has been going on all along. Depletion happens anyway. It won't increase production.

LeeG
12-21-2015, 06:58 PM
We should be filling the strategic reserve while oil is this cheap, not exporting it.

We should, but a fuel tax is politically impossible so we'll buy high and sell low.

johnw
12-21-2015, 07:01 PM
Why at this time? Mitch McConnell refused to pass the renewal of the Zadroga bill unless he got the export ban lifted. That's the bill that provides for medical care for the 9/11 first responders whose health was ruined by the toxic stuff they inhaled.

This means that the oil can be exported and refined overseas. Probably some job losses, since they won't need as much refining capacity here. It might pull domestic oil prices up a little, which is why it became a priority for McConnell's paymasters. I'd say it has everything to do with increased oil production because of fracking.

LeeG
12-21-2015, 07:04 PM
Why at this time? Mitch McConnell refused to pass the renewal of the Zadroga bill unless he got the export ban lifted. That's the bill that provides for medical care for the 9/11 first responders whose health was ruined by the toxic stuff they inhaled.

This means that the oil can be exported and refined overseas. Probably some job losses, since they won't need as much refining capacity here. It might pull domestic oil prices up a little, which is why it became a priority for McConnell's paymasters. I'd say it has everything to do with increased oil production because of fracking.

Then McConnell got nothing but can say he got something, woo woo!

hokiefan
12-21-2015, 07:06 PM
It us a chance for an American industry to effectively compete in the world. that tends to help workers.

Why is that selling out to the oil industry? explain why a continuation of the ban is best for America.

Because thinking long term, we will wish we had that oil. Companies seldom think long term. The US government doesn't think long term. Watch the Chinese, they are thinking long term re: energy reserves and buying up oil capacity without really worrying what they pay today, knowing that in 40-50 years it will be really cheap to have any oil at all.

Cheers,

Bobby

Paul Pless
12-21-2015, 08:36 PM
It us a chance for an American industry to effectively compete in the world. that tends to help workers.

Why is that selling out to the oil industry? explain why a continuation of the ban is best for America.

Spoken like a true Texan.

LeeG
12-21-2015, 08:45 PM
Spoken like a true Texan.

Shuck and jive

Heat up some crude, piss in it and sell it as "product" to a refinery in Canada or Mexico because local refineries won't buy it. It's been going on for decades but it doesn't change the fact we are a net importer. It's as meaningless as Keystone XL.

slug
12-22-2015, 01:56 AM
Its also a powerful foriegn policy tool.

Always good to have many tools in your tray...not just Obama Hope.

LeeG
12-22-2015, 03:01 AM
Its also a powerful foriegn policy tool.

Always good to have many tools in your tray...not just Obama Hope.

Gobbledygook

The US is an oil importer

slug
12-22-2015, 04:32 AM
http://s30.postimg.org/696jkijgh/image.jpg (http://postimage.org/)
image hosting no sign up (http://postimage.org/)

Garret
12-22-2015, 08:29 AM
Obama's gonna sign it without reservation.

Actually, he already said he had many reservations, but can he shut down the gov't over this? I don't think so.

Besides, we should be far, far more worried about the cybersecurity bill attached to the spending bill than this.

Too Little Time
12-22-2015, 10:52 AM
Its also a powerful foriegn policy tool.

Always good to have many tools in your tray.


Gobbledygook

The US is an oil importer

The fact that we use more oil than we produce does not change the fact that our oil can be used as a foreign policy tool. You might notice that Obama and the Fed have used our oil to drive down world oil prices. And we did not have to export any of it. Think what we could do if we exported it.

Considering the number of comments on this board that the wars in the Middle East were about oil, oil does seem to be a very powerful tool.


Me being in favor of less trade does cause me to be against the idea of exporting oil. It could lead to our refineries closing and us becoming dependent on other countries for refined products. But I am not in charge.

LeeG
12-22-2015, 02:48 PM
The fact that we use more oil than we produce does not change the fact that our oil can be used as a foreign policy tool. You might notice that Obama and the Fed have used our oil to drive down world oil prices. And we did not have to export any of it. Think what we could do if we exported it.

Considering the number of comments on this board that the wars in the Middle East were about oil, oil does seem to be a very powerful tool.


Me being in favor of less trade does cause me to be against the idea of exporting oil. It could lead to our refineries closing and us becoming dependent on other countries for refined products. But I am not in charge.

US oil production was very high at $100/barrel for three yrs, imports were fairly flat a year before the price collapse last year. We have been exporting very large amounts of refined products while oil was steady at $100/barrel before the collapse last year. China's lessened demand was the larger factor. So like the Keystone XL the degree of restriction from the export ban isn't that great because the oil was getting through to customers anyway. Getting through US refineries gives us more income and near crude, slightly refined to meet the letter of the law, was already being exported because US refineries really don't need the huge quantities of condensate and NGL that came with fracked sources.

There's a self-stroking national narrative that fracking is a resource like a super giant oil reservoir like those discovered 70yrs ago and we can skip on down the lane as though depletion, the 2008 price shock and $100/b oil never happened or could happen again because, well, we fracked! Except fracked oil is what you go for when oil is expensive because conventional oil can't meet demand.

It's worth eliminating the ban, not because we'll have this great capacity for exporting crude due to fracking, but it's not meeting any practical need.

LeeG
12-22-2015, 02:56 PM
http://s30.postimg.org/696jkijgh/image.jpg (http://postimage.org/)
image hosting no sign up (http://postimage.org/)

Yes you've C&P press releases. The glowing comments are built on an assumption that US production will continue climbing, guess what's happening next year after tremendous decline in new rigs the last year? Production goes down.

Too Little Time
12-22-2015, 05:57 PM
US oil production was very high at $100/barrel for three yrs, imports were fairly flat a year before the price collapse last year. We have been exporting very large amounts of refined products while oil was steady at $100/barrel before the collapse last year.

I don't understand oil. But you seem to understand it less than I do.

Oil prices fell because oil has interesting cash flow issues. You need to pay a lot of expenses. Including debt. Paying debt means pumping more oil as prices fall. That pushes prices down and you pump more oil. Did you see my mention of debt? Low interest rates supported a lot of debt in the oil industry. The Fed did that. And not the price is being paid.

LeeG
12-22-2015, 06:33 PM
I don't understand oil. But you seem to understand it less than I do.

Oil prices fell because oil has interesting cash flow issues. You need to pay a lot of expenses. Including debt. Paying debt means pumping more oil as prices fall. That pushes prices down and you pump more oil. Did you see my mention of debt? Low interest rates supported a lot of debt in the oil industry. The Fed did that. And not the price is being paid.

Are you saying domestic US oil market drove world oil prices down?

johnw
12-22-2015, 06:34 PM
I don't understand oil. But you seem to understand it less than I do.

Oil prices fell because oil has interesting cash flow issues. You need to pay a lot of expenses. Including debt. Paying debt means pumping more oil as prices fall. That pushes prices down and you pump more oil. Did you see my mention of debt? Low interest rates supported a lot of debt in the oil industry. The Fed did that. And not the price is being paid.

First of all, nothing you've said here contradicts Lee's post, so I'm not sure why you are being so condescending. Second, you are correct that the issues you are talking about exacerbate a fall in oil prices, but they don't cause the initial fall. Part of the issue here is that the recession produced a reduction in demand, and once the West started to recover, China started going into recession, reducing their demand. No one has any production discipline within the oil cartel except the Saudis, and they reached a limit to how much they were willing to cut back. They also don't dominate oil production the way they did in the '70s.

Another issue is that economies generally are becoming less energy intensive. Take a look at this:

https://www.aei.org/wp-content/uploads/2014/09/gdp-600x430.jpg
https://www.aei.org/publication/chart-of-the-day-in-2013-america-was-more-than-twice-as-energy-efficient-compared-to-1970-when-earth-day-started/

There's a pretty good article on the reasons for the price drop here:
http://fortune.com/2015/12/22/oil-price-plunge/

From my personal experience covering the oil industry as a business writer, the wells that get shut down first are the old ones. The rig count has already fallen, but there are a lot of wells that are drilled but aren't completed, and it makes little sense not to start pumping those. The question is, how long will the banks carry the oil companies? If they pull the credit, there will be a lot of wells selling off cheap, a lot of consolidation in the industry, and a shift in the pricing power of the oil producers.

Who you don't want to be in an oil bust is one of the oil service companies, because their business is tied to the rig count.

In terms of OPEC, they are doing something they've done before, selling oil off cheap to kill the development of new sources, so they can get their pricing power back.

S.V. Airlie
12-22-2015, 07:43 PM
Refineries are not going to shut down. We are already short of refineries to meet the national demand.

Katrina come to mind?Certain types of refineries like the one in TX, that was supposed to take Canadian oil.

johnw
12-22-2015, 09:22 PM
Refineries are not going to shut down. We are already short of refineries to meet the national demand.

Katrina come to mind?

Actually, we export more refined products than we import, and refineries are being shut down.

Imports in 2013 of refined petroleum products, 76.3 billion (https://en.wikipedia.org/wiki/List_of_motor_vehicle_deaths_in_U.S._by_year#/media/File:U.S._traffic_deaths_as_fraction_of_total_popu lation_1900-2010.png), exports 102 billion (http://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/usa/show/2710/2013/).

Plants are being shuttered because they are uneconomic: http://instituteforenergyresearch.org/analysis/petroleum-imports-and-exports-whats-the-story/