Following a four decade-long ban on unrefined crude oil exports, the US Commerce Department has given the go-ahead for two firms to export ultra-light oil to international buyers. The move comes amid emboldened domestic oil production and growing calls for the US to rethink its stance on exports. However, despite growing pressure from numerous parties, the White House insists that the decision does not signal any such change in policy.
“As the Commerce Department has said, oil that goes through a process to become a petroleum product is no longer considered crude oil,” said a department spokesman Josh Earnest. The department that oversees US oil exports has given the go-ahead to Pioneer Matural Resources CO and Enterprise Products Partners, which will from hereon be permitted to export oil condensates from the Eagle Ford geological region of Texas.
[T]he White House insists that the decision does not signal any such change
in policy
The Energy Policy and Conservation Act of 1975 was initially brought in to protect against the Arab oil embargo and has stood the test of time unchallenged until recently, with new oil and gas deposits alongside improved upon extraction methods having boosted oil production.
Although many have proceeded to speculate about a change in policy, many analysts have been quick to point out that the decision much rather amounts to a change in commodity classification. Whereas crudes are believed to be too unstable for transportation, the ultra-light crude in question will be put through a stabilisation process and made safe for transport and storage.
“There’s really a lot of confusion about what this means. Really what they’re doing is clarifying what they mean by refined,” says Thomas Pugh, Commodities Economist at Capital Economics. “That being said, this really is a step in the right direction, although it’s clearly not going to lead to masses of exports.”
The US remains a net oil importer, though the so-called shale revolution has increased the country’s piece of the pie, and talk of the nation soon becoming a net exporter has gathered momentum. Experts worry, however, that lifting the ban on experts could see a rise in domestic oil and gas prices and destabilise the region.
