Crude Export Ban No Match for Lightest U.S. Shale Oil

[Purveyor]

By Bradley Olson and Mike Lee - Feb 26, 2013

A glut of shale oil in fields from Texas to North Dakota is forcing producers to find ways around the U.S.’s three-decade-old ban on crude exports in order to seek higher prices in foreign markets.

Kinder Morgan Energy Partners LP is among companies setting up mini-refineries to process certain grades of crude just enough to qualify them as refined fuels, which are legal to export.

The industry’s best hope is ultra-light oil, which is so abundant in shale rock that it has flooded the Gulf Coast and traded for a record discount to global benchmark Brent crude last quarter. Potential revenue for exports is $40 billion a year based on global prices, or about $9.7 billion more than what the same oil fetches in the U.S.

“It’s going to get exported in one way, shape or form or another,” said Ed Hirs, a professor of energy economics at the University of Houston who also runs a small production company in Texas. Producers will sell it abroad “as a product in its own right, or it’s going to be exported as a finished good, having become diesel, plastic or fertilizer.”

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http://www.bloomberg.com/news/2013-02-26/crude-export-ban-no-match-for-lightest-u-s-shale-oil-energy.html

[leveymg]

1. Isn't this evading the purpose of the law? Isn't that itself a crime? Why is gasoline so expensive

at a time that there's a glut of domestic production?

Where the f-ck is the Department of Justice?

[bhikkhu]

2. Its a glut of expensive-to-produce oil, so there's no "cheap" solution

Oil has to stay above $80-90 a barrel for it to be economically produced. If it gets cheaper, production shuts down.

Anyone who remembers the early 80's should be able to relate to how that works; oil prices tanked and thousands of stripper wells in the US shut down, as it was cheaper to plug the wells than it was to maintain production.