The ban on the export of crude oil has been in effect in the U.S. since the Arab oil embargo of 1973. It was put in place to protect the domestic oil consumers from volatility and price hikes in the wake of soaring worldwide oil prices. But the oil industry is now forcing the American leadership to rethink the wisdom in continuing the ban.
There are several reasons behind the oil industry’s demand for lifting the ban on export of crude oil. First, the domestic production of crude oil has been on an upswing. In fact, last year saw the country continue its “relentless rise” in crude oil production, said the International Energy Agency (IEA).
According to statistics, the U.S. crude oil supply rose 15% in 2013, the fastest absolute annual supply growth in the world.
Meanwhile, the U.S. Energy Information Administration had said in December last that the country will continue to produce “copious” amounts of natural gas and oil through 2016. According to an energy analyst, the U.S. could produce a surplus of about 1 million barrels per day of light sweet crude that could be shipped to other countries should the government decide to lift the ban on crude oil exports.
As demand falls and supply increases in the U.S., domestic oil producers want to diversify their market by gaining greater access abroad. Proponents of overturning the ban have also argued that the move will boost domestic production by allowing companies to sell overseas and may also help narrow the U.S. trade deficit.
However, those who oppose lifting the ban believe that allowing more exports might cause the domestic gasoline prices to rise and hurt American consumers. Domestic refiners, who benefit from cheaper supplies given the surge in oil and natural gas production, have also expressed concern over lifting the prohibition on foreign crude sales.
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Article Added on Monday, May 12, 2014
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