The WSJ reports "the U.S. is considering relaxing regulations that ban the export of crude oil, citing growing domestic production of oil that isn't suitable for refining locally, U.S. Energy Secretary Ernest Moniz said Tuesday.
The statement was the most explicit yet by the Obama administration that it would push ahead with plans to study changing U.S. law to allow for exports, a contentious subject on Capitol Hill.
U.S. oil production has soared in recent years due to the use of new hydraulic fracturing technology, which has unlocked the country's large oil- and shale-gas reserves. According to the International Energy Agency, the U.S. will become the world's largest oil producer by around 2020.
But U.S. law prohibits most crude exports. That has caused some distortions in global and domestic energy markets, and dampened the price of oil in the U.S. compared with the rest of the world. With all that new crude, domestic bottlenecks have formed in places like North Dakota, transportation hubs like Cushing, Okla., and most recently, along the Gulf of Mexico coast, where much of the nation's refining capacity is located.
In recent years, many U.S. refineries there have geared their production toward processing heavy oil from Latin America and Canada. Now, they are struggling to keep up with rising supplies of light, sweet shale oil from places like North Dakota and Texas.
"The issue of crude oil exports is under consideration…A driver for this consideration is that the nature of the oil we're producing may not be well matched to our current refinery capacity," Mr. Moniz said at a media briefing Tuesday after a two-day energy conference in Seoul. He said a study of the subject, including multiple agencies, is currently taking place.
Any discussions over potential exports will likely be drawn-out and politically fraught. Many industries have benefited from lower oil prices, and won't be eager to compete with foreign buyers. Politicians will likely approach any change to policy with caution".
