To sell abroad or stay at home: Those are the terms of a debate roiling the U.S. oil industry. At the heart of the disagreement is a 1975 ban on U.S. oil exports imposed by Congress when domestic reserves were dwindling and the country was still spooked by the 1973 Arab embargo. Thanks to new technology, oil production in the U.S. now tops 8 million barrels a day, the highest since 1988. That’s prompted U.S. producers to call for an end to the ban so they can serve new markets. Refiners and other companies want the ban maintained to benefit from the cheap prices of the local oil they use to make gasoline, chemicals, and plastics. “This debate is a major slugfest between industrial consumers and producers of oil,” says Michael Webber, deputy director of the Energy Institute at the University of Texas.
A recent development has put a spotlight on the dispute. In late June, the Commerce Department determined that two Texas companies, Pioneer Natural Resources and Enterprise Products Partners, could start exporting an ultralight type of crude called condensate, which occurs naturally as a gas and condenses into a liquid once drilled out of the ground. Condensate is added to heavier crudes to make them easier to refine, and is a basic ingredient for chemicals. Horizontal drilling has unlocked far more condensate than the U.S. can use. Exporting it should relieve the surplus building up. The two companies had asked Commerce if minimally processed condensate could be classified as a refined product, which can be exported. Commerce said it could but insisted the ruling doesn’t open the door to abolishing the ban.