LATE SHIPMENTS

The US picked a rotten time to start exporting crude oil

Obsession
Energy Shocks
Obsession
Energy Shocks

After months and months and years and years of lobbying, America’s oil industry finally got Congress to lift a ban on oil exports in December. The Wall Street Journal notes (paywall) that the first such sanctioned shipment got loaded up on New Year’s Eve in Texas and that plenty more are on the way.

But with crude oil prices testing decade-plus lows (they’re approaching $30 per barrel at the moment), it’s not exactly a black gold bonanza.

As the Journal story notes, the spread between US benchmark West Texas Intermediate crude and the international benchmark Brent has shrunk dramatically in recent years. Back in 2011 the difference was as high as $25, which would have provided a stronger incentive for foreign parties seeking crude to send a tanker across the ocean. Now both contracts are close to even.

A push for US exports would have made more sense a few years ago, when US production started to increase in earnest and before Saudi Arabia challenged shale producers to a battle for market share that’s still going strong with no clear winner in sight.

At first, the increased domestic production was helping to wean the US off imports, but in the last few months that degree of oil-independence has started to fade. Import volumes look poised to return to growth any month now.

Thus, there are around a record 390 million barrels of crude oil sloshing around in commercial tanks around the nation, not to mention all the oil Saudi Arabia’s been pumping, plus everything Iran’s about to start shipping out.

All this means that US got to the getting just when it stopped getting good.

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