Abundance has replaced scarcity as the chief driver of American energy politics these days, and that’s on full display in this week’s decision by the Commerce Department to permit two Texas companies to export a very light, minimally processed variety of crude oil. The ruling paves the way for Pioneer Natural Resources and Enterprise Products Partners to begin exporting what is essentially unrefined oil as early as August—the first time in nearly 40 years, since a ban on crude exports was enacted in the wake of the 1970s Arab embargo. The FT reports:
The US Department of Commerce, which controls oil exports, said in a statement there had been no change in its policy on crude oil exports. However, the minimal processing used by Pioneer could be emulated by other companies as a low-cost way to make their oil eligible for export.
This looks like a savvy political move. If this sets a precedent, it will give oil from America’s shale formations a potential outlet abroad, while circumventing—not overturning—America’s ban on crude oil exports. That ban is sure to be the subject of plenty of political grandstanding in the coming months, as fracking continues to reconfigure the U.S. oil trade balance.We’ll be hearing plenty more on this subject in the run-up to this year’s midterms, and likely the 2016 presidential election. There are cases to be made on both sides; exports would provide an outlet for a growing glut of domestic crude and could stave off a dip in production, but would likely do so at the cost of raising domestic prices. That being said, one thing is for certain: this is the kind of problem we’d like to have.