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The ‘Us Vs. Them’ Fallacy On Oil Exports

The ‘Us Vs. Them’ Fallacy On Oil Exports thumbnail

Lacking factual, substantial reasons for keeping the United States’ antiquated ban on crude oil exports, those who oppose letting U.S. crude reach the global marketplace are left to make a non-factual, unsubstantial case instead.

In a letter to the editor in the New York Times, the Sierra Club’s Michael Brune offers up a couple of scary fictions – in time for Halloween – to distract Americans from the stark, “off oil” agenda that Brune and many others advocate: a harsher, less healthy, less hospitable world minus the reliable, affordable fuels that are fundamental to modern living.

API President and CEO Jack Gerard recently called them out for the false choice that’s central to their advocacy:

“There is a vocal minority who believe that instead of growing our economy to lift people out of poverty we should reduce our current standard of living and cap our potential. We reject this notion and encourage policy makers to continue down the path we have shown to work, supplying abundant, affordable, and reliable energy to consumers while lowering our impact on the environment.”

As for crude oil exports – every major study has found that exporting U.S. oil would be a boon for America and Americans:

Consumers – Exporting domestic crude would put downward pressure on U.S. gasoline prices, the studies say, ranging from a penny per gallon (U.S. Energy Information Administration) to 5 to 10 cents per gallon (Congressional Budget Office) to up to 12 cents per gallon (Brookings/NERA).

Jobs/economy – Exporting domestic crude would create up to 300,000 jobs and increase U.S. GDP by $38.1 billion in 2020, according to an ICF study. A study by the Aspen Institute/MAPI estimates 630,000 jobs would be added at peak in 2019. Brookings/NERA says lifting the ban will boost “U.S. economic growth, wages, employment, trade, and overall welfare.” IHS’ study:

Lifting the 1970’s-era restrictions on U.S. crude oil exports would lead to further increases in domestic oil production, resulting in lower gasoline prices while supporting nearly 1 million additional jobs at the peak . … It would lead to a total of $746 billion in additional investment during the study period (2016-2030) …

Domestic energy – Allowing U.S. oil to reach the global marketplace, to compete fairly with crude from other countries, would end the disincentive to domestic production posed by the export ban. That is, accumulating volumes of domestic light oil no longer would be closed off from the global market, a discouragement to domestic production as detailed in a Rice University study. ICF projects that by allowing crude exports, domestic oil production could increase up to 500,000 barrels per day by 2020. EIA estimates an additional 470,000 barrels per day.

Security – As the world’s No. 1 producer of oil and natural gas, the United States should be actively engaged in global energy markets. Lifting the oil exports ban would allow the U.S. to help diversify and balance the world crude oil market – to America’s benefit and the benefit of America’s friends, a number of whom have called for lifting the export ban. Columbia University’s Center on Global Energy Policy:

Allowing exports would make the US more resilient, not less, to supply disruptions elsewhere in the world. Greater integration into global markets would make US oil supply more responsive to international market developments, mitigating the impact on American consumers and the US economy of production losses in other countries. … Increased US crude production can weaken the economic power, fiscal strength and geopolitical influence of other large oil producing countries.

Michele Flournoy, President Obama’s former undersecretary of defense for policy, in congressional testimony this summer:

“[W]e should not underestimate the degree to which becoming an oil exporter could impact perceptions of the United States as a vital global power, helping to discredit erroneous narratives of U.S. decline. … When more supply originates from producers who are not vulnerable to political instability, conflict or threats to their energy infrastructure, the overall market becomes more stable. … [A]llowing U.S. oil exports would enhance the energy security of key U.S. partners, from Poland to India to Japan. Indeed, our closest allies in Europe and Northeast Asia would welcome – and have asked for – the unrestricted export of U.S. crude oil. … Enabling U.S. oil exports would strengthen our geopolitical influence, leadership and leverage with allies and adversaries alike.”

We could go on, but clearly, lifting a 1970s-era oil export ban that no longer benefits the U.S., our economy and our standing in the world would be a boon to America. The current debate over crude exports is about getting a policy that matches the new realities created by the ongoing American energy revolution – specifically, ending an exports policy that hinders the revolution.

As we say, a number of opponents of domestic oil exports are simply against oil, offering no realistic plan for the future that credible forecasts (see here, here and here) say will see the world continue to use oil and natural gas as primary fuel sources – because they’re energy-rich, reliable, scalable and beneficial.

We hear Brune and others talking about climate and air quality issues – yet our industry is actually taking action on them, investing $90 billion in emissions-reducing technologies from 2000 to 2014. That’s nearly as much as all other U.S.-based private industries combined and more than twice the amount invested by the next two individual sectors – the auto industry ($38.2 billion) and the electric utility industry ($37.1 billion). Industry is leading the way, as well, by developing America’s vast natural gas reserves, the increased use of which has played a major role in reducing power sector carbon dioxide emissions to a 27-year low.

So, opponents of industry need to drop this “Us vs. Them” rhetoric, which willfully ignores what industry is doing to safely, responsibly power America – while creating jobs, boosting the economy and providing important benefits to its true owners: millions of regular Americans.

The U.S. energy revolution is a broad, dynamic, historic success story, not the misfortune some try to claim. It’s authored in large part by an innovative industry sector that’s deeply invested in America and is robust enough to safely develop the fuels Americans count on today and tomorrow. Exporting U.S. crude oil – along with increased access to domestic energy reserves, commonsense regulation and workable leasing and permitting structures – would be an integral part of extending that success story, for all Americans.

By Mark Green

breaking energy



29 Comments on "The ‘Us Vs. Them’ Fallacy On Oil Exports"

  1. penury on Sat, 31st Oct 2015 4:41 pm 

    I would not know where to start so all I will say is Some of this might be true, some of it may be partially true,ut the majority is pure tripe.

  2. Truth Has A Liberal Bias on Sat, 31st Oct 2015 4:48 pm 

    A variety of things may or may not happen if USA started exporting crude. The most likely outcome however will be a narrowing of the Brent – WTI price spread.

  3. Boat on Sat, 31st Oct 2015 5:29 pm 

    Allowing U.S. oil to reach the global marketplace, to compete fairly with crude from other countries, would end the disincentive to domestic production posed by the export ban.

    Refineries just imported less light oil to mix with heavy oil. There was some fear there would be to much US light oil but as frackers slow refiners can just change the import mix.

  4. bug on Sat, 31st Oct 2015 5:38 pm 

    Boat, where is this disincentive to domestic production? Is there one? Any link, I am curious to see if true.

  5. BobInget on Sat, 31st Oct 2015 5:46 pm 

    U.S. crude oil refinery inputs averaged over 15.6 million barrels per
    day during the week ending October 23, 2015, 271,000 barrels per day
    MORE than the previous week’s average. Refineries operated at 87.6%
    of their operable capacity last week. Gasoline production INCREASED last
    week, averaging 9.7 million barrels per day. Distillate fuel production
    INCREASED last week, averaging 4.9 million barrels per day.

    U.S. crude oil imports averaged over 7.0 million barrels per day last
    week, down by 439,000 barrels per day from the previous week. Over
    the last four weeks, crude oil imports averaged OVER 7.2 million barrels
    per day, 3.8% below the same four-week period last year. Total motor
    gasoline IMPORTS (including both finished gasoline and gasoline blending
    components) last week averaged 722,000 barrels per day. Distillate fuel
    IMPORTS averaged 108,000 barrels per day last week.

    Total products supplied over the last four-week period averaged over
    19.5 MILLION barrels per day, UP by 1.0% from the same period last year.
    Over the last four weeks, motor gasoline product supplied averaged over
    9.1 million barrels per day, UP by 3.4% from the same period last year.
    Distillate fuel product supplied averaged about 4.0 million barrels per
    day over the last four weeks, UP by 10.0% from the same period last
    year. Jet fuel product supplied is UP 1.9% compared to the same four week
    period last year.
    .
    The WTI price was $43.91 per barrel on October 23, 2015, $3.39
    under last week’s price and $37.36 below a year ago. The spot price for
    conventional gasoline in the New York Harbor was $1.354 per gallon,
    $0.033 lower than last week’s price and $0.970 less than a year ago. The
    spot price for No. 2 heating oil in the New York Harbor was $1.364 per
    gallon, $0.024 below last week’s price and $0.981 under a year ago.
    The national average retail regular gasoline price DECRESED to $2.228
    per gallon on October 26, 2015, $0.049 under last week’s price and
    $0.828 below a year ago. The national average retail diesel fuel price
    DECREASED to $2.498 per gallon, $0.033 per gallon lower than last week
    and $1.137 less than a year ago.

  6. BobInget on Sat, 31st Oct 2015 6:01 pm 

    THAT’S CORRECT.

    Diminish amounts of domestic crude available
    increases amounts of crude needed to IMPORT.
    It’s that simple.
    Assuming we continue to increase consumption by one percent a year*.

    * EIA
    In 2014, the United States consumed a total of 6.97 billion barrels of petroleum products, an average of about 19.11 million barrels per day.2 This total includes about 0.34 billion barrels of biofuels.

    To state gasoline prices will go down is nothing short of treasonous.

    Prior to the ‘shale revolution’, now in shambles,
    the US was a net importer of crude oil (and gas). Exporting raw crude puts the nation on par with Mexico with living standards to match.

  7. GregT on Sat, 31st Oct 2015 6:31 pm 

    “Boat, where is this disincentive to domestic production?”

    The cost to produce the oil vs the amount that the economy can afford to pay for it.

    The incentive to produce is profit. The disincentive to produce is lack of profit. It doesn’t get any simpler.

    “Prior to the ‘shale revolution’, now in shambles,
    the US was a net importer of crude oil (and gas). Exporting raw crude puts the nation on par with Mexico with living standards to match.”

    Thanks Bob. Why is this so difficult for so many people to figure out?

  8. bug on Sat, 31st Oct 2015 6:46 pm 

    Greg, so not making a profit is the disinsentive? I thought it was something else or another factor (which I didn’t know what it was). Personally, I am just trying to understand this.

  9. jjhman on Sat, 31st Oct 2015 7:02 pm 

    How many people are out there who still believe in “growing our economy to lift people out of poverty”?

    When I was a young engineer we called that “wrong on the first page”.

  10. GregT on Sat, 31st Oct 2015 7:06 pm 

    bug,

    I’m not sure what you’re thinking here? Generally people invest in companies, and go to work to make money. Not to lose it. Sometimes companies will try to maintain business through tough times, but eventually, if profits don’t return, they will go out of business and investors will lose their investments.

  11. Bloomer on Sat, 31st Oct 2015 7:31 pm 

    It’s hypercritical that we in the West tout that we are the champions of democracy and human rights, yet continue to import oil from Saudi Arabia.

    The Saudis oppress women and do not allow freedom of speech, or freedom of religion or non-religion. Its a country where stoning people is still acceptable.

    Imagine if the United States had the courage to live up to its principles and stopped importing Saudi oil. This would spur alternative energy development, reduce carbon emissions and create employment for millions of Americans.

  12. makati1 on Sat, 31st Oct 2015 7:40 pm 

    All that is keeping the oil industry alive is a few wells still producing at a profit or near a profit, and zero interest (borrowing) rates. Nothing else.

    Short has often said that we are approaching the ratio where petroleum is no longer either financially nor energy ‘profitable’ to recover. When that day comes, it will be the end of the Age of Petroleum.

    I think that day is rapidly approaching. An article I read yesterday placed the end of personal cars by 2050. I doubt they will last even to 2025. We shall see.

  13. bug on Sat, 31st Oct 2015 8:40 pm 

    Greg,I agree, but it is also true that some are losing money but some are making it. So ,as long as they are making money
    (some) it goes on. People that run businesses probably think,”things will improve”, right? They think optimistically until the last second, different thinking than you and I think.

  14. Boat on Sat, 31st Oct 2015 8:40 pm 

    GregT

    GregT on Sat, 31st Oct 2015 6:31 pm
    “Boat, where is this disincentive to domestic production?”

    That was a quote from the post. You didn’t read it? For the purpose of conversation you should at least read.

    My response was how refineries handle not being able to export oil/ the excess light oil short says the US has Low API. Even though it sells for the same price and the heavy oil needs it to mix with.

    Refineries just imported less light oil to mix with heavy oil. There was some fear there would be to much US light oil but as US frackers slow production refiners can just change the import mix.

  15. Boat on Sat, 31st Oct 2015 8:47 pm 

    Bloomer,

    Bloomer on Sat, 31st Oct 2015 7:31 pm

    It’s hypercritical that we in the West tout that we are the champions of democracy and human rights, yet continue to import oil from Saudi Arabia.

    No it is not critical that we champion human rights. It is more critical we have an energy supply. Americans are just human like everybody else.
    Americans also oppress women. It’s a world wide problem. And since the Saudi will spend 100’s of billions of oil money on weapon systems it helps the US dominate in military tech.

  16. rockman on Sat, 31st Oct 2015 8:59 pm 

    And one more time. As of the latest numbers the US is exporting oil at the rate of 200+ million bbls per year. And even more important: US citizens are not consuming 19 million bopd…US refineries are. The US might be importing 7 million bopd but it is also turning 3 million bopd into refinery products which are exported. US refineries buy about 2.6 billion bbls of oil in the foreign market place. The same refineries buy even more from the domestic market place. IOW US oil producers are already directly competing with foreign oil sellers. The US refineries will buy oil from the best priced source. A significant amount of Eagle Ford oil is refined domestically but much is bought by Canadian refineries to blend with their heavy oil imports. They can only buy that oil if they pay more the US and other foreign refineries.

    The price of all oil is based upon a global market. That price is adjusted for its grade and transportation costs. If a German refinery offered a higher price then a US refinery they would get the oil. Just as happened in the past when US oil was exported to Begium and Switzerland.

    From what I’ve found no request for an exception to the “ban” has never been denied. Thus there is no effective ban. Which essentially means there is no ban on US oil exports. Which should be obvious when the EIA reports that hundreds of million of bbls of US oil are currently being exported annually.

  17. rockman on Sat, 31st Oct 2015 9:09 pm 

    And just for the math challenged: about 1.2 BILLION BBLS of oil per year in the US (domestic production and imports) are entirely beneficial to foreign consumers.

  18. Boat on Sat, 31st Oct 2015 9:23 pm 

    Rock,

    I haven’t done the research but I would assume crude imported in would go back with finished product out. Shipping is usually cheaper with a return load.

  19. GregT on Sat, 31st Oct 2015 9:53 pm 

    Boat,

    ““Boat, where is this disincentive to domestic production?””

    “That was a quote from the post. You didn’t read it? For the purpose of conversation you should at least read.”

    That was a question that bug asked Boat. A question that I took the liberty of answering. I am not the least bit surprised that you were unable to figure that out.

  20. apneaman on Sat, 31st Oct 2015 9:53 pm 

    The Climate Deception
    Dossiers
    Internal Fossil Fuel Industry Memos Reveal
    Decades of Corporate Disinformation

    http://www.ucsusa.org/sites/default/files/attach/2015/07/The-Climate-Deception-Dossiers.pdf

  21. rockman on Sat, 31st Oct 2015 10:36 pm 

    Boat – Yes: one could say we only import a net 4 million bopd (7 mm bopd – 3 mm bopd)

    And more numbers that might surprise some folks: Last July the US was exporting gasoline at the rate of 7.8 BILLION GALLONS per year and 20 BILLION GALLONS of diesel per year.

    US gasoline and diesel are priced by the global market. If a German retailer is willing to pay more then a US retailer for diesel (adjusted for shipping costs) then it will not be available to US truck drivers and will be shipped to Germany. That should make it easier to understand why domestic diesel prices tend to be much higher than gasoline: more foreign competition for it then for gasoline.

    Trivia: last July Mexico was importing US diesel at the annual rate of 2.9 BILLION GALLONS. And France was #2 at 2.5 BILLION GALLONS per year.

    All numbers from our friends at the EIA.

  22. Boat on Sat, 31st Oct 2015 10:45 pm 

    apeman.

    Every year 10’s of thousands of collage kids come out and enter business with one thing in mind. Use everything in their skill tool box to separate money from consumers for their company. Legal or not, moral or not. The way it has always been.

  23. GregT on Sat, 31st Oct 2015 11:07 pm 

    Boat,

    “The way it has always been.”

    Human beings have existing on this planet for tens of thousands of years. The oldest known university is less than one thousand years old. Modern industrial society has only existed for around 200 years, thanks to fossil fuels. When fossil fuels are no longer an option, modern industrial society will no longer exist, and neither will modern business, or higher education for the masses.

    The way it has always been, was people working to feed, clothe, and shelter themselves. Survival Boat. The last 200 years was a one time anomaly in mankind’s entire existence on this planet. Never to be seen again. Within your lifetime.

  24. joe on Sun, 1st Nov 2015 7:39 am 

    Depends on who is buying into which market. Would the US sell to China, to Europe, Mexico or South America? It would leave the US at risk from another oil crisis. The US would effectively end up importing all its oil and if the Saudis decided to stop sending ships for whatever reason then another painful readjustment would be needed.
    This is just a political argument anyway because the US already imports a vast portion of its oil, so it’s already exposed. It’s one of those things that Politicans like to call ‘wedge’ issues. They can go nuts over it because it’s not very important in the end.

  25. BobInget on Sun, 1st Nov 2015 10:01 am 

    off topic;

    “Disintegration of the fuselage took place in the air, and the fragments are scattered around a large area (about 20 square kilometers),” Viktor Sorochenko, executive director of Russia’s Interstate Aviation Committee, told journalists, according to reports.

    (looks like a pressure switched bomb was planted on the aircraft)

  26. BobInget on Sun, 1st Nov 2015 10:17 am 

    Rockman,

    At least admit, reexported petroleum products
    represent windfall profits for major Saudi/Exxon owned refineries along America’s Gulf coast.
    These profits remain super high only until oil prices rise.

    NYT:

    HOUSTON — Exxon Mobil and Chevron reported plunging revenue and profits on Friday, but their fortunes would have been even worse had it not been for a boom in their refining and chemical businesses. (30) snip

    True or not?

  27. Boat on Sun, 1st Nov 2015 11:39 am 

    Bob.

    A few years ago the Motiv went through an 11 billion dollar expansion and at the time was the largest gasoline and diesel plant in the Gulf. It is owned 50% Shell and Saudi. It was set up for tar sands so the light sweet fracker oil has to be mixed with heavy oil to work at peak efficiency. Wonder if short knows that.
    But yea many refiners have foreign investment. Just as the tar sands in Canada have much foreign investment.
    As a side note, that is what is funny about the XL pipeline pipeline. Not much American money involved or made and we in Texas get to eat all that pollution

  28. rockman on Sun, 1st Nov 2015 1:55 pm 

    Bob – What’s not to admit? That’s their LEGAL responsibilty by federal law via the SEC. Some how you seem an apology should be forth coming from a for profit designed enterprise for making a profit for their shareholders of whom many are retired citizens.

    You do understand there is no Mr. ExxoNMobil raking in those profits, don’t you? LOL

  29. Kenz300 on Tue, 3rd Nov 2015 8:53 am 

    The world needs to transition away from fossil fuels…..

    A 9-Minute Guide to Pope Francis’ encyclical on climate change : Biofuels Digest

    http://www.renewableenergyworld.com/articles/2015/06/a-9-minute-guide-to-pope-francis-encyclical-on-climate-change.html

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