Export of American Domestic Oil

Editorial

By Dennis Brown

Is no one troubled, as I am, at the enthusiasm for increased exporting of our domestic carbon reserves? Marathon oil –along with others–is lobbying intensely for repeal of the 1975 Energy Policy and Conservation Act, which forbids export of domestic oil. The Act was passed when US oil production was in steep decline and we believed we needed to reserve our domestic supply for American consumers and American businesses.

The dependence on foreign oil was a key chink in our country’s security, rendering us vulnerable to Arab boycotts. Now that fracking technology has made reserves newly accessible, we seem anxious to shovel them out the door (port) as fast as possible, hastening the time we return to the insecurity of (only) a few years ago.

The ban, incidentally, was only on American crude, not on refined products such as gasoline and diesel fuel. And in fact we are shipping abroad record amounts of these fuels abroad. Does no one worry that as we hurry to ship it abroad, we hasten the return of our energy insecurity.

The situation with coal is equally fraught, for different reasons. Even folks who believe climate change is outside mankind’s control will have to regret the lung disease, miners’ accidents and the occasional mine collapse that inevitably accompanies its production. I have read that more people die from mining coal every day than died in the entire Fukushima disaster in Japan. In that context, we do have a national policy of reducing burning of coal and again, shipping it overseas to avoid US restrictions is unseemly.

There are a couple of other factors that cause me to worry. Oil companies estimate their reserves in two different contexts. First, oil companies provide one set of estimates when they argue that they should be allowed to export oil. They provide different estimates to the SEC, as required by law. One should not be surprised that the first is generally higher than the second, but it appears that the first is up to 27 times higher than the second. In other words, they are telling the SEC that they have only one-twenty-seventh the amount of oil reserves that they tell the legislators they have. So the possibility (likelihood) exists that the legal decision will be based on inflated estimates of the amount of oil we actually have.

The second factor is less self-serving but points in the same direction. The estimates of our proven reserves rest on an assumed rate of decline for oil fields. That is, we have a “standard” rate of decline that tells us when drilling begins how much oil remains in the ground. But there is reason to believe that wells brought on line through fracking decline faster than the standard. So, again, the reserves may be over-stated. Claims that the US will overtake Saudi Arabia as the world’s leading producer of oil seem to be based on this assumed rate of decline, and, I have noticed, are no longer being made.

us oil export pro con

Dennis E. Brown, a marketing consultant residing in Thousand Oaks, CA

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