Energy Boom Warrants Rethinking 1970's Energy Policies
"Signaling a possible break with 40 years of energy policy, Energy Secretary Ernest Moniz has suggested that it may be time for the Obama administration to reconsider the nation’s ban on exporting domestically produced crude oil," writes Clifford Krauss.
The rethinking of decades-old policies arises from a five-year "frenzy of oil drilling in shale rock formations in Texas and North Dakota [that] have produced a glut of crude in the Midwest and Gulf of Mexico states."
"We are not dealing with an era of scarcity, we are dealing with a situation of abundance. We need to rethink the regulatory scheme and the statutory scheme on the books."
Cohen put it in more specific terms for Bloomberg Businessweek:
Burgeoning U.S. production in shale hotspots such as North Dakota and Texas will soon overwhelm the capacity of domestic refineries and prompt the federal government to reconsider its restrictions on crude exports,
Gilbert adds that according to Exxon, "World-wide, companies will pump greater amounts of oil through 2040 and still leave nearly two-thirds of the earth's crude deposits untouched."
Moniz did not limit the policies that need to be rethought to the crude oil prohibition. Environment & Energy reporter Colin Sullivan writes (subscription), "Asked to clarify during a news conference, Moniz said there are any number of policies crafted in the 1970s -- such as the Strategic Petroleum Reserve -- that might be re-examined in light of the United States' newfound position as a more robust producer of oil and natural gas."
And why stop there? Moniz added that "even how Department of Energy is internally structured, one could look at it."
To illustrate how anachronistic the export prohibition is, Clifford Krauss points to Canada, the one country that has an exemption from the prohibition, and ironically, also the largest exporter of oil to the U.S.
(S)ince many grades of American oil are selling at a discount to global benchmarks, eastern Canadian refiners are buying American crude to process into diesel and gasoline.