May 8, 2014 11:54 pm
White House ‘taking an active look’ at crude oil
By Gregory Meyer and Ed Crooks in New YorkAuthor
The White House is examining the longstanding US ban
on exports of crude oil, a senior official has said, offering the Obama
administration’s most detailed statement yet of its thoughts on the issue.
John Podesta, who is one of President Barack Obama’s
most senior advisers, said the administration was “taking an active look” at
the strains caused by the US shale oil boom. Any change would have implications
for oil traders, refiners and consumers worldwide.
US oil production has surged from its 2008 nadir as
drillers developed ways to unlock supplies from shale formations.
Exporting crude pumped in the US is effectively barred
to any country, except Canada. Although the bulk of US export curbs date to
legislation passed in 1975, the White House can loosen them.
Increases in domestic output have been especially
dramatic in the Eagle Ford shale of Texas and Bakken shale of North Dakota.
North Dakota’s oil production has risen more than fivefold in the past five
years to 951,000 barrels per day in February, while Texas’ has more than
doubled to 2.9m b/d.
The light, low-sulphur quality of shale oil is
ill-suited to much of the refining infrastructure lining the Gulf of Mexico,
which was designed to process the heavier varieties from countries such as
Saudi Arabia and Mexico. Commercial crude oil stocks on the Gulf coast are more
than 200m barrels, a record high, leading some to warn of a looming glut.
Asked on Thursday about the administration’s thinking
on crude oil exports, Mr Podesta said: “We’re taking an active look at what the
production looks like, particularly in Eagle Ford, in Texas, and whether the
current refinery capacity in the US can absorb the capacity increase to refine
the product that’s being produced.”
“We’re taking a look at that and deciding whether
there’s the potential for effectively and economically utilising that resource
through a variety of different mechanisms,” he told Columbia University’s
Center on Global Energy Policy conference in New York.
The Obama administration has so far been reticent on
the issue of the export ban. The Department of Commerce, which administers
export licences for crude oil, has given no indication of any policy change.
Lawmakers including Mary Landrieu and Lisa Murkowski,
respectively the Democratic chair and Republican ranking member of the US
Senate energy committee, have urged the government to look into easing the ban.
The oil industry is conflicted, with producers firmly
supporting freer trade in crude and refineries divided on whether to keep the
The Energy Information Administration, an independent
research wing of the US Department of Energy, has said it will examine the
impact of US crude oil exports on global markets.
Mr Podesta formerly led the Center for American
Progress, a Washington think-tank which supports keeping the export ban in