Oil Prices – US Lifts Oil Export Ban After 40 Years
It’s only taken 40 years to change, but The US Commerce Department has given the green light to several businesses to start once again exporting crude oil, a huge policy change to a controversial ban which has stayed in place for the last four decades. But the question remains, will this solve the volatility in oil prices?
At this moment, the US government restricts the export of crude oil in its unrefined form, the block hasn’t applied to processed variations such as gasoline and diesel. The limitations were brought into position during the 1970s as an immediate consequence and reaction to the 1973 oil embargo imposed by nations in the Arab world. This was a volatile time for oil prices, with many US citizens not able to afford to fill up cars, and the price was spiking north in huge surges.
Known as ‘condensate’ by the energy industry or Ultra-Light Oil, which can be turned into gasoline, jet fuel and diesel, will be given the green light to restart on exports. It has been brought into play by a personal ruling from the federal government affecting Pioneer Natural Resources Co. and Enterprise Product Partners LP.
The fracking revolution in the United States has given the US a huge stock of Oil. An amount which looks set to make the nation the largest petroleum producer in the world, ahead of Saudi Arabia and Russia.
The United States of America produced 8.3m barrels per day of crude in April, the highest level since 1988, according to figures from the US Energy Information Administration.
The price spikes in the 1973 Arab oil embargo were the reason why Congress put a ban on exporting Oil. At the time it was thought that the US was running out of oil.
It remains to be seen whether this will help the US economy, or the US citizen cope with ever increasing oil prices. But surely, it has to be a good scenario in the long term.
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