Thursday, December 12, 2013

Exxon Mobil Wants To Export Oil

Exxon Mobil Corporation, the nation's largest energy producer, is calling for the U.S. to lift restrictions on exporting domestic oil that date back to the Arab oil embargo of 1973.  According to its annual energy outlook, the company forecasts decades of abundant supplies of petroleum in the U.S. and elsewhere as well as increasing global demand for oil.

By 2015, energy companies will tap more oil in North America from dense layers of rock alone than the current output of members of the Organization of the Petroleum Exporting Countries except Saudi Arabia, Exxon projects. World-wide, companies will pump greater amounts of oil through 2040 and still leave nearly two-thirds of the earth's crude deposits untouched.

Exxon has long held that the same trade rules should apply to oil and gas as other products made in the U.S., and has said that North America was pumping enough oil and gas to become an exporter. But now the world's largest investor-owned energy company is explicitly calling for an end to America's effective ban on most crude exports.

The Center supports exporting American oil.

The primary laws prohibiting crude exports are the Mineral Leasing Act of 1920, the Energy Policy and Conservation Act of 1975, and the Export Administration Act of 1979. The so-called short supply controls in the Export Administration Regulations (EAR) of the Bureau of Industry and Security (BIS), an agency of the Department of Commerce, spell out these restrictions.

The ban was a response to the Arab oil embargoes.  The restrictions on exports were borne, as was the Department of Energy and the Strategic Petroleum Reserve, on oil disruptions.  Due to fracking and horizontal drilling, those restrictions no longer exist.

The U.S. allows some oil to be shipped to Canada, but bans most other exports of crude. 

The sheer abundance of oil and gas in the U.S. poses challenges for Exxon. Booming production has overwhelmed U.S. demand, pushing domestic prices lower and eroding profit margins for energy producers. Fracking and horizontal drilling in shale formations are making this petroleum production possible.
Some companies, including Exxon, are already seeking to export natural gas to countries willing to pay a premium for it. The U.S. government has approved licenses for several terminals to export natural gas, chilled into liquid form, to countries with which it doesn't have a free-trade agreement.
The energy company projects that carbon emissions will cost $80 a ton by 2040 as governments move to curb greenhouse gases, adding to its costs.  It also projets that unconventional sources of gas, such as shale, will make up a third of the world's gas supplies by 2040, the company predicts.  (WSJ, 12/11/2013, Council on Foreign Relations)

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