U.S. Crude Oil Exports, Really? - A Look at the UK
Last week the U.S. Senate’s Energy Committee held the first hearing in decades on the question of whether exporting US crude oil, prohibited by law since the 1970s, should be allowed again. Attendees heard proponents say that allowing crude exports would hold prices down with opponents claiming the opposite case.
To be clear, these would not be net crude oil exports. Of the 19+ million barrels a day that we consume at present, we import roughly 7.5 million barrels of crude per day and export roughly 2.5 million b/day of petroleum products (diesel and propane, for example). And even the US EIA admits we’ll be importing millions of barrels of crude oil for decades, in fact indefinitely.
So this is really an intramural fight: US oil producers want to be able to export while refiners and most users want to keep the crude at home. As Senator Ron Wyden, Chairman of the Energy Committee, said in his remarks, don’t expect this argument to be resolved quickly.
Here’s a related thought experiment. It involves the UK crude oil situation between 1980 and today, shown in Figure 1 below. After joining the exclusive club of Top 20 world oil producers in 1978, two years later the UK’s oil producers joined the ranks of oil exporters. Over the next 25 years they exported roughly ¼ of their total oil production, earning around $20+ per barrel most of those years. But after production peaked in 1999, within six years the UK was back to importing oil, at an average price approaching $100 a barrel. Imports have grown back to ½ million b/d, which is 1/3 of total consumption.
My question to the Brits: if you could turn the clock back, would you allow all your oil to be produced at the maximum possible rate, earning the amount of export dollars you did, if it meant that within a generation you would be back to being an oil importer paying roughly five times as much per barrel? In other words, how did the buy-high sell-low plan work for you? And were those exports in your best long-term national interests? Didn’t think so…
There are almost as many differences as there are parallels between the UK and US circumstances. But they share a bottom-line question: is it in the USA’s best long-term national interests to produce unconventional shale oil sufficiently fast that we end up exporting some of it overseas? Didn’t think so…
Fig. 1: The UK exported oil for 25 years from 1980 through 2005, shown above as the amount produced above the consumption line. Exports peaked at 1.2 million barrels a day in 1999, the same year that production peaked at 2.93 million b/d. imported roughly a half-million b/d in Data is from BP (2013).
Steve Andrews is a former energy consultant and a contributing editor for Peak Oil Review.
What do you think? Leave a comment below.
Sign up for regular Resilience bulletins direct to your email.