The U.S. is considering relaxing its ban on crude oil exports for the first time since it was largely prohibited in 1975 after the Arab oil embargo, the energy secretary said Tuesday.
American oil production has soared in recent years along with the advent of hydraulic fracturing — or fracking — a type of horizontal drilling in which large amounts of sand, water and chemicals are shot at high pressure into rock formations to release trapped oil and gas.
Despite increased oil production, crude — or unprocessed — oil exports are currently banned, with few exceptions, but U.S. Energy Secretary Ernest Moniz said that overseas sales might soon be allowed as domestic stockpiles hit record highs.
“The issue of crude oil exports is under consideration,” Moniz said at a press briefing after attending the 5th annual Clean Energy Ministerial in South Korea. “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.”
Many U.S. refineries are either uninterested or unable to process the crude, and with few domestic buyers, producers have been forced to decide between leaving the oil in the ground or selling it at depressed prices, the Council on Foreign Relations (CFR) said on its website.
Moniz cited the U.S. president’s adviser John Podesta as saying the issue is under consideration.
“I want to remind you that we are still a major importer of oil. So it is true that we are producing a lot more oil, and frankly we expect to be close to 10 million barrels per day in crude oil production within a few years,” Moniz said.
The commerce department has the final say in the decision over exports, Moniz added.
The U.S. government effectively banned crude oil export in 1975 — except for small amounts to Canada, as long as it is not re-exported, along with some Alaskan oil that could be sold abroad.
In recent years, crude oil exports have grown from "next to nothing" in 2007 to about 100,000 barrels per day by March 2013 — all of which went to Canada, according to the CFR.
The 1970s Arab oil embargo was a rude awakening for the U.S., spotlighting U.S. dependence on foreign oil. During the 1973 Arab-Israeli war, Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo against the U.S. for its role in supporting the Israeli military.