We also export and import automobiles and many other products. This market movement helps get the desired type of car–or oil–to the consumer. But many consider oil to be more critical to our national security.
As the chart shows, exports of refined products, which are not restricted by law, have been increasing for many years.
Crude oil exports to Canada and the re-export of imported oil are allowed under the law that generally bans oil exports. In 2012 the U.S. exported about 67,000 barrels of crude per day (bopd), while our imports averaged 10.6 million bopd.
Recent licenses to export crude oil to Europe are unusual and have caught the attention of the media because of the current debate about ending the oil export ban. It appears that the European export licenses are for re-exporting imported crude.
In case you wondered–the Department of Commerce, Bureau of Industry and Security is tasked with granting crude oil export licenses. The Department of Energy grants natural gas export licenses.
Oil producers and some on Capitol Hill–Senator Lisa Murkowski (R-AK), for example–want to end the oil export ban. Others, including refiners who can export oil products, want to maintain the crude oil ban. Exports, whether crude or refined products, may receive a higher sales price, especially if a local surplus of a particular type of oil is driving down prices.
How did we get to this point? The 1975 Energy Policy and Conservation Act, a response to the 1973-74 OPEC oil embargo, prohibited the export of oil and natural gas except when export was determined by the President to be in the national interest, such as in recognition of the historic trading relations with Canada and Mexico.
The 1975 Energy Policy and Conservation Act had some other requirements that look less reasonable than originally. Some of these requirements may be a topic of a future blog. The bill: prohibited power plants from burning natural gas or oil; established the Strategic Petroleum Reserve; and established the first fuel economy standards for passenger automobiles at 18 miles per gallon.