Analyst sees little chance oil export ban will end soon

SAN ANTONIO — The 40-year-old ban on U.S. crude oil exports isn’t likely to end soon because other issues are more likely to command policymakers’ attention, energy analyst Harold “Skip” York told a San Antonio audience this week.

York, with energy research firm Wood Mackenzie, stressed in his presentation Monday at the American Fuel & Petrochemical Manufacturers annual meeting that the opinion is his own. He added that the likelihood of an end to the export ban has been much debated at his company.

Lifting the crude export ban “is not the biggest fish we have to fry in U.S. policy,” York said. “We can’t even solve the big problems.” He said the issue likely doesn’t rank high enough on the federal agenda to warrant executive or legislative action.

While some lawmakers in both parties support ending the ban, other Democrats and Republicans favor keeping it.
The ban bars exports of unprocessed oil — with exceptions for California crude, some Alaskan production and shipments to Canada — but does not affect gasoline, diesel and other refined petroleum products that can be exported freely.

Oil producers have argued that the ban, enacted in the 1970s when embargoes by Middle Eastern oil producers led to U.S. fuel shortages — should be loosened because it suppresses domestic crude prices, while refiners have taken various stances on the matter.

York offered his view at the end of his talk about trade flows and which types of crude likely would be exported from the U.S. Gulf Coast should the ban be lifted.

Wood Mackenzie’s early conclusion is that the most compelling economics would be for exporting Mars, a medium sour crude that comes from the Gulf, to Asia. The Far East would be an attractive market, he said, even though exporters would compete with medium grade crudes from the Organization of the Petroleum Exporting Countries.
The Saudis and other OPEC members are trying to maintain their market share in Asia, he said, but it’s a huge and growing market, which gives the United States a chance to compete.

Exporting light crude oil, such as that produced in the South Texas’ Eagle Ford Shale, to Northwest Europe and Asia also could be economically feasible, he said. But  Europe is refining less light crude,and  most of the oil its refineries use is produced domestically or from nearby regions. “The size of the market in Europe is going to be fairly limited,” York said.