America's oil export boost barely scratches the surface. The administration of President Barack Obama is relaxing a decades-long ban on selling black gold abroad. But the move only affects ultra-light crude, which accounts for just a sliver of U.S. output. Allowing sales overseas of all types of oil would narrow the trade deficit and foster jobs. That, though, requires Congress to act.
Since the 1970s, the U.S. has allowed only a trickle of its crude to be exported – a restriction introduced to alleviate shortages following the Arab oil embargo. Such limits seem increasingly out of date. U.S. oil output has jumped 50 per cent since 2010. Curbing foreign sales narrows the market for U.S. oil and helps explain why West Texas Intermediate fetches about $8 (U.S.) less per barrel than internationally traded Brent.
The U.S. Commerce Department is now allowing Enterprise Products Partners and Pioneer Natural Resources to export condensate. This light crude accounts for barely a tenth of America's 8.2 million barrels a day of daily production, according to Oppenheimer – a figure that may rise to nine million by the end of the year. And it requires some processing to qualify for the exemption. The restriction means that perhaps 300,000 barrels a day of such oil could be sold abroad, Citi analysts estimate.
It's not the White House's fault. The administration only has some administrative measures at its disposal, such as issuing ad hoc licences, to allow companies to avoid the ban – and these are hitting their limits.
That shifts the onus on Congress. There are some obvious benefits that ought to appeal to at least some lawmakers, especially in an election year. Lifting the ban entirely ought to eradicate the price difference between Brent and WTI crude. At current production levels that would boost U.S. drillers' annual revenue by some $23-billion. Closing that gap ought to boost investment and support an additional one million jobs by 2018, according to a recent estimate by IHS.
U.S. exports would also rise, narrowing the $471-billion trade deficit by $43-billion in 2016, the consultancy calculates, and as much as $87-billion by 2025.
The surge in oil production is already providing a fillip to the American economy. Scrapping the ban altogether would maximize the windfall.