Are you paying too much to fill up your car or truck? Don’t worry our government has the perfect fix to guarantee that prices will keep going higher. Yup, this week the government granted permission for two US companies to EXPORT OIL PRODUCTS. You read this right. The government gave two companies permission to EXPORT PRODUCTS.
The two companies are Pioneer Natural Resources (PXD) and Enterprise Products Partners (EPD). The export numbers for this year are between 200,000 and 300,000 barrels, with exports set to double in 2015.
Here we are in the midst of an oil crisis with Iraq with the prices skyrocketing and gasoline at the pump going skyward and we EXPORT our precious products. This will just about guarantee higher prices going forward.
You are probably wondering how all of this could happen. It seems that there is a loophole in our export restrictions. Crude oil exports have been banned since the oil shortage of the 1970s. BUT, if you refine it slightly, it no longer is crude oil and can be exported. This is what these two companies are doing. We should be asking ourselves, why not mandate that these companies set up contracts with refineries to process the oil into gasoline and bring down our gas prices?
We are in the midst of a Catch 22 with oil prices. One the one hand we have a glut of oil in the US from our oil shale operations. Oil producers are lobbying to lift export restrictions further to export more oil. One the other hand we have an oil crisis with Iraq that is being used to drive oil and gas prices higher. However the real numbers do not justify higher prices. The US Energy Information Administration reported these oil import numbers for March 2014. Imports from Iraq were 9,006 (monthly thousand barrels). The US total oil imports for March 2014 were 286,437 (monthly thousand barrels.) Iraq imports were a mere 3% of our total imports.
Instead of relying on Iraq oil, we should be using the oil glut in the US to meet the needs of American drivers and bring down the price of gasoline at the pump. What is happening is that the high gasoline prices are draining American consumers’ disposable income and creating an unnecessary drag on our economy.
If we look back at the tech boom of the 1990s, one underlying factor was low oil prices, that at one point went down to $10.00 per barrel. It’s time for the US to hunker down and solve our energy needs. What has made America a world power has been our easy access to oil. We have that chance again. We have an oil glut from our shale operations that can be used domestically, not exported to foreign countries. Our largest oil supplier is Canada with 99,356 (thousand barrels) in March 2014. Canada, too, has an extensive oil shale production. If need be we can simply increase our imports from Canada to make up for the shortage from Iraq.