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US Crude Oil Exports: "Overnight Impact"

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US Crude Oil Exports: "Overnight Impact"

Unread postby westexas » Thu 27 Mar 2014, 10:12:50

I understand that Harold Hamm testified in front of Congress. An excerpt from a Reuters article (emphasis added):

Lifting U.S. crude export ban would help counter Russia- oil CEO
http://www.reuters.com/article/2014/03/ ... 2T20140326

“While opening LNG exports is a noble goal and one that we as a country are actively working towards, the fact is the infrastructure to undertake large scale overnight LNG exports does not currently exist,” Harold Hamm, the chairman and CEO of Continental Resources Inc, will tell lawmakers at a House of Representatives Foreign Affairs Committee hearing slated for 10 am/1400 GMT on Wednesday.

“If we want to have an overnight impact on today’s global events, we can immediately begin exporting crude oil, which does not have the same infrastructure constraints” as LNG, he will say, according to prepared remarks.


It’s easy to demonstrate the “overnight impact” that Mr. Hamm is talking about. Here is a link to the latest four week running average US supply data from the EIA:

http://www.eia.gov/dnav/pet/pet_sum_sndw_dcus_nus_4.htm

If we just focus on the imported crude oil supply for US refineries over the last four weeks, we (gross) exported 64,000 bpd and had (gross) imports of 7,337,000 bpd. So net imports of crude oil were:

Gross Imports – Gross Exports = Net Imports
7,337,000 – 64,000 = 7,273,000 bpd

Let’s assume that we boost gross exports by 1,000,000 bpd, and to offset for the decline in crude oil supply to US refineries we then boost gross imports by 1,000,000 bpd. Net imports of crude oil would then be:

8,337,000 – 1,064,000 = 7,273,000 bpd
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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby Paulo1 » Thu 27 Mar 2014, 10:25:31

Of course the at pump price would increase..say +$1.00? Companies would be pleased, but what say the public then?

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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby westexas » Thu 27 Mar 2014, 10:39:47

It's basically a fight between Mid-continent refiners and Mid-continent producers. Refiners are more than happy to pay WTI prices for crude oil, while generally charging market (Brent based) prices for refined products, and pocketing the difference as higher crack spreads.

If the US exported some grades of crude oil and condensate, while boosting imports to compensate, I think it would have a negligible impact on what US consumers pay at the pump, and noted above, if one uses some elementary school arithmetic, it's hard to see how it would have an "Overnight impact" on global events.
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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby ROCKMAN » Thu 27 Mar 2014, 13:46:20

So funny. Apparently Mr. Hamm follows the philosophy: never let a good crisis go to waste. So kind of him to offer the oil the US consumer uses to our cousins on the other side of the world. A very generous offer. I have an even better idea: let Mr Hamm swap some of his oil for some of the KSA oil we import. Then there wouldn't be a need to ship both loads of oil half way around the world. Such swaps have been done for decades to save those transport costs. This way Mr. Hamm can continue to sell his oil in the US...and continue getting the same price. And as an incentive he picks up a bit more of US market share by replacing the KSA oil. That way he can sell even more oil here...at our posted prices.

I can play this freaking game with Mr. Hamm all day long. To bad his audience in congress doesn't understand even the basics of oil marketing.
Last edited by ROCKMAN on Thu 27 Mar 2014, 15:09:01, edited 2 times in total.
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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby AndyA » Thu 27 Mar 2014, 13:47:52

In the land of the blind, the blindest man is king.
If you want the truth to stand clear before you, never be for or against. The struggle between "for" and "against" is the mind's worst disease. -Sen-ts'an
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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby Subjectivist » Thu 27 Mar 2014, 14:29:18

ROCKMAN wrote:So funny. Apparently Mr. Hamm follows the philosophy: never let a good crisis go to waste. So kind of him to offer the oil the US consumer uses to our cousins on the other side of the world. A very generous offer. I have an even better idea: let Mr Hamm swap some of his oil for some of the KSA oil we import. Then there would be a need to ship both loads of oil half way around the world. Such swaps have been done for decades to save those transport costs. This way Mr. Hamm can continue to sell his oil in the US...and continue getting the same price. And as an incentive he picks up a bit more of US market share by replacing the KSA oil. that way he can sell even more oil here...at our posted prices.

I can play this freaking game with Mr. Hamm all day long. To bad his audience in congress doesn't understand even the basics of oil marketing.


His audience in Congress only undertand sounding good making promises to get reelected. None of them can balance a checkbook let alone balance oil trade.
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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby Quinny » Thu 27 Mar 2014, 14:34:12

I am sorry, but I just do not understand the point in what the guy is saying and peoples comments seem to confirm that. Am I just being dumb?
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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby westexas » Thu 27 Mar 2014, 14:53:20

Re: Quinny

Are you saying that you are confused by assertions that exports of oil and gas--from a net oil and gas importer--will have a material impact on global supplies of net exports of oil and gas?
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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby ROCKMAN » Thu 27 Mar 2014, 15:14:55

Q - I suspect your confusion comes from trying to see the logic in the completely illogical proposition Hamm is tossing out. It would be like me, some one with no money to buy a plate of beans offering to give some of my beans so you can eat. How can I give you some beans if I don't have any. Except, of the course, I give you the beans my next door neighbor (in the case Canada or Mexico) gives me. The how do I eat if I do?
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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby Pops » Thu 27 Mar 2014, 15:29:04

Prices in ND dipped to near $70/bbl recently. Exporting some crude would help Harold out with settling his divorce I suspect.

Sep Sweet Crude Price = $92.96/barrel
Oct Sweet Crude Price = $85.16/barrel
Nov Sweet Crude Price = $71.42/barrel
Dec Sweet Crude Price = $73.47/barrel
Jan Sweet Crude Price = $74.20/barrel
Feb Sweet Crude Price = $86.89/barrel
Today Sweet Crude Price = $84.00/barrel

https://www.dmr.nd.gov/oilgas/directors ... -03-13.pdf
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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby Quinny » Thu 27 Mar 2014, 17:05:06

Thank-you for confirming my confusion :)

What I can't understand is the firstly why the stupidity is published, but secondly no-one responds in the Reuters link with the obvious points made here!
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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby GHung » Thu 27 Mar 2014, 17:12:29

Quinny - I left a comment calling them on the math; simple and to the point. That was hours ago. I guess they didn't want their fairy tale edited with reality.
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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby westexas » Thu 27 Mar 2014, 21:26:57

A comment following the Reuters article:

UrDrighten wrote:
If we have such a surplus of oil that we are looking for people to sell it to, perhaps we would be wise as a nation to cut back until production meets domestic demands.

What we have now is all we’re ever going to get.


So, we should cut back our crude oil production until our domestic crude oil production is sufficient to only meet the demand for crude oil from US refineries, about 15.0 to 15.5 mbpd. Given the discussion in the media about exporting US oil and gas, it's actually a pretty reasonable comment.

And of course, last year, a talking head on CNBC noted in passing that the US was already a net crude oil exporter.

And so it goes . . .
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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby peterjames » Thu 27 Mar 2014, 23:40:41

Very similar argument that was put together by gas companies along the eastern parts of Australia. Previously gas was a large by product of the oil industry and was sold cheaply by to supply the eastern states. Then came the idea to export it for more money, and to spend 80 billion dollars building 3 gas plants to allow export. Now they realise they may have trouble supplying 3 gas plants, and the east coast of Australia. The only thing that has occurred, is that gas prices have (or will, when long term contracts expire), trebled in price and the eastern states may suffer gas shortages in coming years.
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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby rollin » Fri 28 Mar 2014, 00:27:25

This is a case of national interest intersecting market forces (greed). The failure over the last six decades by the market to protect the interests of the US has been mildly throttled back by government edicts but mostly enhanced by other government edicts (trade agreements). Apparently the business sector is not happy until it is allowed to freely run amok without being impeded at all, even if the free market has corrosive effects upon the society supporting it . Yes, I said supporting it. All those businesses use the roads, buildings, land, water, people and resources of a nation and seem to have about as much appreciation for all that is given to them by the people they so quickly desert. The mercenary mindset of business today is an ethical and moral black spot on society.
Even worse, government has aided this mindset time and time again to the distress and harm of the people they are supposed to be protecting and serving.
Once in a while the peasants do win. Of course then they just go and find new rulers, you think they would learn.
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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby Pops » Fri 28 Mar 2014, 10:17:37

Rollin I mentioned the other day that the grid might have been more reliable in the days of the regulated monopolies. It dawns on me that the Reagan deregulation - privatization - is akin to the Great Russian post-Soviet privatization - Katastroika - the handover of the country's wealth and security to the few. That's the dynamic behind the current focus on inequality, hoarding vs sharing.

In the future of falling energy this is the big question, do we as countries and individuals fall together or fall apart?

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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby Subjectivist » Sun 30 Mar 2014, 07:48:26

This just in from Forbes, aparently not everyone is fooled by the saudi america rhetoric.
http://www.forbes.com/sites/lorensteffy ... s%3Aenergy

But oil exports also have a different impact on the home front than LNG exports. While we currently have more gas than we need, we still import, on a net basis, about 7.3 million barrels a day, or just less than half of our daily consumption.

Any exports would have to be offset by additional imports, says Jeffrey Brown, an independent petroleum geologist who tracks import data. Embracing exports the way Hamm suggests would simply shift the burden of greater foreign oil dependency from Europe back to the U.S.

This is why the notion of energy independence is unrealistic. Midwest producers like Hamm talk about rising oil production as if we have a surplus, but we are a long way from domestic production levels that would reduce imports to zero. Even if we achieve those levels, we are unlikely to maintain them for long.

For consumers, the entire debate doesn’t matter much. Exporting crude probably would have little effect on gasoline prices because most refiners are already selling their products based on the Brent price for crude, which is higher than the price for West Texas Intermediate, the U.S. benchmark. The Brent, or world, price is currently about $6.50 a barrel higher than WTI.


More at the link.
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Re: US Crude Oil Exports: "Overnight Impact"

Unread postby ROCKMAN » Sun 30 Mar 2014, 12:36:09

"While we currently have more gas than we need". So even when these idiots knock down the idea of the US bailing out others with oil exports they still can even get the simple basics correct: we only produce 93% of our NG consumption. We do not "have more gas then we need". That's why we are a net importer of NG...just like oil. At one time I looked at Forbes as a source of info on subjects I knew little about. Given what I've learned about their "insights" on the energy situation I may have been making a big mistake all these years. LOL.
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