Commerce Department Essentially OKs Crude Oil Exports

Energy

Published: December 31, 2014 7:45 am

Last Updated: April 27, 2020 7:19 pm

Without actual saying the words, the U.S. Department of Commerce on Tuesday made clear that the U.S. ban on crude oil exports has been lifted. The Commerce Department’s Bureau of Industry and Security (BIS) said that it has approved requests by some companies to export lightly refined condensates and it has outlined how it will treat further requests for permission to export oil.

This is not exactly news. The BIS had approved in June requests from Enterprise Products Partners L.P. (NYSE: EPD) and Pioneer Natural Resources Inc. (NYSE: PXD) to export the minimally refined condensates. Enbridge Inc. (NYSE: ENB) and Valero Corp. (NYSE: VLO) had received BIS permission in April to re-export crude from Canada that had been imported into the United States.

The news is that the agency has spelled out for the first time (in an FAQ of all places) what the rules are. The agency defines crude oil as liquid hydrocarbons that have not passed through a distillation tower. The definition includes “reconstituted crude petroleum, and lease condensate and liquid hydrocarbons produced from tar sands, gilsonate, and oil shale.” These may not be exported.

What may be exported are lease condensates that have been “processed through a crude oil distillation tower.” That passage transforms the unexportable crude into an exportable refined petroleum product. As the BIS notes, “Petroleum products are subject to few export restrictions.”

Why now after months of dithering around? Could it be that the Obama administration has figured out that exporting near-crude is more likely to keep crude oil costs low than it is to raise them. If U.S. crude from shale plays in North Dakota can get into the international market, and the Bakken producers can keep their costs under control, the United States may be able to take a bit of market share away from the Saudis.

At one time earlier this year when oil prices were climbing, some suggested that a series of scheduled releases from the U.S. Strategic Petroleum Reserve would push crude prices lower. The producers in the North Dakota and Texas accomplished the same thing without government intervention.

ALSO READ: Top 5 Producers in North Dakota’s Bakken Field

Are You Ahead, or Behind on Retirement? (sponsor)

If you’re one of the over 4 Million Americans set to retire this year, you may want to pay attention. Many people have worked their whole lives preparing to retire without ever knowing the answer to the most important question: are you ahead, or behind on your retirement goals?

Don’t make the same mistake. It’s an easy question to answer. A quick conversation with a financial advisor can help you unpack your savings, spending, and goals for your money. With SmartAsset’s free tool, you can connect with vetted financial advisors in minutes.

Why wait? Click here to get started today!