The Financial Times has just revealed that the oil trading arms of BP, Shell and Vitol have applied for licenses to export U.S. crude to Canada.
U.S. crude exports are restricted for energy security reasons and granting new licenses would mark a reversal of decades of this policy.
The specific crude that is currently looking for an outlet is coming from the booming Eagle Ford in Texas. It’s a light sweet crude obtained from the geologically tight formations through horizontal drilling and fracking.
That this crude is desperately seeking a market outside of the United States signals an irony that will not be lost on tar sands campaigners, or the communities living close to the super-polluting heavy oil refineries on the Texas Gulf Coast.
These refineries have in recent years invested billions of dollars – albeit with the help of generous tax breaks – in special equipment to refine Canada’s dirty tar sands oil and other very heavy oils from Latin America and elsewhere. As a result, appetite for the Eagle Ford’s light sweet oil on the Gulf Coast, the world’s largest refining complex and a relative stone’s throw from the Eagle Ford fields, is limited.
Thus it would appear that Texas, and the US more generally, is exchanging light sweet oil, that is easy to refine and yields a high proportion of gasoline per barrel, for Canada’s heavy sour tar sands oil that yields more diesel and byproducts such as petroleum coke.
Given where we are with action on climate change, and the fact that the fossil fuel industry already has five times the reserves that the planet’s atmosphere is able to cope with, the U.S. becoming an oil exporter is a big deal.
In the last decade, the North American oil and gas industry has pried open billions of tons of oil and gas through new technologies, from tar sands extraction and ultra-deepwater drilling to fracking. It has in its sights billions more in the form of the kerogen in the shales of the Rocky Mountains and newly accessible resources in the Arctic and elsewhere. The industry’s hunger for profit is insatiable and high oil prices mean that it may be able to keep gorging for decades.
But as the U.S. moves to increase exports of coal, natural gas, petroleum products and now crude oil, what will become of the already marginalized debate on climate change?
The industry has invested hundreds of millions of dollars in undermining climate science and the perception of climate science by the American public. It defeated climate legislation in 2010 and continues to fund and encourage a climate skeptical Congress that attacks any attempt to regulate greenhouse gases.
For the fossil fuel industry, the profits at stake have increased with every new discovery of oil and gas in North America and every new development. By opening up new markets for American oil, the stakes are being raised another notch.
Indeed the immediate effect of U.S. crude exports will be an increase in the price of U.S. oil. U.S. oil has been at a discount to international oil because of the transport bottlenecks that these exports will help to solve. Exporting American crude will expand the market for American crude, ease the glut and raise the price of American oil.
So while the industry cashes in and finds even more incentive to maintain business as usual and ignore the looming climate crisis, as if it really needed one, the fight for climate justice just got that little bit harder.
Another sign that the game is changing faster than anyone predicted. I wonder what the political consequences are when increasing amounts of oil are exported, considering the local environmental impacts and risks of fracking and Arctic drilling. Do we reach a point where people do not accept these risks on their home turf, when both the revenues and the resulting oil go out of state?
So Much For Energy InTrust Us Not.
That appears to be an interesting but misleading summary and spin on the facts; which would be unfortunate – and counter-productive to the urgent goal of reducing carbon production. Fundamentally, the end products are various forms of refined oil. The prices of those are largely established on global or some special regional markets (as in the gasoline produced specifically within and for California). If there are temporary or ongoing or unique or counter-intuitive pricing contradictions between some refined light oil- vs. heavy oil-based products, that’s really a different topic. The actual salient facts in this situation appear to be that the tar sand- and other heavy-oils of Canada or South America are being transported to and refined in Texas – but then require export licenses to ship back out to their originating or other global markets. Perhaps the best policy for US is that if an oil or natural gas product was either originally drilled/produced OR refined in the US, then it stays in the US. Otherwise, for better or worse, maybe the refined products of oil from outside the US should be allowed to be sold into any global markets; or maybe input for that choice should come from those breathing the air in the communities of those refineries (or any shipping/distribution operations) and those with the jobs in the refineries. But when there are so many solid facts and other reasons to steadfastly advocate for carbon reduction and other environmental protection and renewal, it deteriorates the credibility of everyone advocating for those goals to make stuff up.
Jim, I’m afraid you have misread what we are discussing here. Please read the FT or other articles (FT is subscription only but there are now many free articles discussing this news) regarding new applications to export crude oil. We are not discussing refined product exports. Those do not require any license and are flowing out of the US at the rate of about 3 million barrels per day.
I think that if you read about the issue we are discussing here you will find that we have not distorted any facts.
Sorry, a friend that knows my interest in this topic sent me a link to this article, so I took a look. Hadn’t realized reading a related FT article might be a prerequisite. This article addresses a policy change. That policy change and its effect are a really remote tangential-issue in the context of meaningful solutions to global warming and the general cascading of global environmental deterioration. I can’t imagine that FT has big, but otherwise unheralded, news such as this policy would cause world markets to no longer set the price of crude based on supply, demand, crisis-invention, and commodities futures manipulation. (it didn’t, did it?) So I viewed this article as just discussing or recommending various pending or possible changes in policies that are related to what are fundamentally zero-sum issues – changes in policies that allow or restrict export of US crude or commodity refined oil products. Focusing on anything other than meaningful developments in alternative energy and other solutions that will enable environmental recovery is a wasteful distraction….sort of like discussing the etiquette qualities of others standing in line for boats on the Titanic. Sure, perhaps it’s interesting for a nano-second, but essentially it’s part of a relentless stream of fatal distractions. We need to focus on identifying the major root problems, the effective and actionable solutions, and how to enable and drive citizen participation to make those solutions happen before the tipping point making the perishing of mankind inevitable. These are just man-made problems – they don’t have superhuman causes. So there are man-made solutions possible. Again, sorry, but I thought this forum was more toward identifying, developing, enabling and driving solutions. So, and further apologies, but that’s the context I was hoping to see or, failing that, to encourage. Tough love, all that. Cheers.
No, that my further response was not at all redundant with my initial. Are you filtering advocacy of effective solutions?
There is a fine line between man-made and superhuman, when the issue is an Earth we are far from understanding, or at least – being given the information to understand completely. ENERGY itself is a superhuman phenomenon, And it will be essential to our survival, and the survival of the planet, that we explore a solution to the current “energy as commodity” system, which ties it to war, exploitation, and that tricky MONEY thing. I may be talking ahead of the curve in terms of solutions, but we are nearing a critical point in our relatively short history on Earth. Every aspect of this problem needs to be examined clearly.
US Oil exports are good because they reduce the world market prices and end the insane low US price levels which lead to wasting oil within the United States. A ban on exports equals a subvention for the Saudi Arabian terror supporters.