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Congress Eliminates U.S. Export Oil Ban

Commodities / Crude Oil Dec 23, 2015 - 02:01 PM GMT

By: BATR

Commodities

If you want to know how the “so called” Free Trade exponents think about exports, just analyze the impact and actual beneficiaries of the US House passes bill to lift 40-year ban on oil exports.

“The crude export restrictions were introduced in the US in 1975 in the middle of the energy crisis. They followed OPEC’s oil embargo of the US and other countries backing Israel during the Arab–Israeli war of 1973. In the face of embargo-related high oil prices, Washington eased the limits on oil imports and ordered an export ban.”


The reporting in The Hill demonstrates the corporatist influence on pushing the Big Oil interest to a House of economic ill-informed Representatives. In The tragedy of the crude oil export ban, you read an absurd argument intended to dupe the public into thinking that the oil conglomerates will reduce the pump cost of gasoline.

“The export ban was intended, above all, to protect our domestic oil supplies in an era of oil scarcity and help keep gasoline prices low. Four decades later, a wide body of research indicates that eliminating the ban now in an era of oil abundance would stabilize and even lower the price of gasoline at the pump for millions of Americans. This is because domestic gasoline prices are based on global oil prices.  Lifting the ban would increase the global oil supply and lower global oil prices – which would lead to savings for U.S. consumers at the pump. According to scholars at the Columbia University Center on Global Energy Policy – who both happen to be former advisers to President Obama and Secretary Clinton – lifting the ban would cause prices at the gasoline pump to fall, potentially as much as 12 cents per gallon.”

The two primary reasons for the drop in the global price of oil are political and economic. 

  1. Russian oil exports to the EU need to be slashed to punish Putin from defying The U.S. war intervention in the Middle East. The lifting of Iranian sanctions requires a lower oil price to place roadblock on their economic recovery.
  2. OPEC’s strategy to bankrupt North America fracking ventures with below cost production prices is working. The ability of the U.S. to maintain their recent production levels will fall dramatically with a sinking barrel price.

For the next gem of Wall Street disinformation, the dependable Newsweek rag pushes the need to put a lid on keeping our domestic crude in the ground for future national use. The article Big Oil Companies Can’t Wait For Repeal of U.S. Export Ban, uses tortured logic to convince their gullible readers that exporting American oil will reverse the crash in oil prices.

“This autumn, Goldman Sachs sounded a warning about the dangers of the nation’s high inventories, saying if its “surplus breaches logistical and storage capacity,” there could be a collapse in prices to the cost of production. It added, “The potential for oil prices to fall to such levels, which we estimate near $20 a barrel, is becoming greater as storage continues to fill.”

Common sense states clearly that the more oil available worldwide, in a sharply retracting demand marketplace will keep the barrel price low. So why should the U.S. sell its remaining resources into a global collapsing economy? Companies rarely consider the national interest, especially the current reincarnations of Standard Oil.

The following statement frames the significance of conserving the use of such a valuable resource, How Important Was Oil in World War II? “Now, it cannot be stated too forcefully, American oil, which amounted in all to 6 billion barrels, out of a total of 7 billion barrels consumed by the Allies for the period of World War Two, brought victory! “

Real smart, sell American oil at rock bottom prices to the EU so that the Russians lose their market share. Looks like a formula that Putin will be exporting Russian oil to the U.S. when the fracking wells go dry.

As for OPEC reliability, Venezuela and Saudi exports to the U.S. are falling. Likewise, Mexico is also declining. Canada is the exception. Rejecting the Keystone Pipeline has not stopped the flow to the lower 48. Review the stats from the U.S Energy Information Administration for a complete list.   

The Oil Roustabout Economy is becoming even more bizarre. The conclusion in the essay, The Foolish Exporting Natural Gas Policy, similarly applies to Oil.

“Pursuing and encouraging a LNG sell abroad strategy just rewards the gas drillers and exporters. The very real risks and environmental fallout from unsafe fracking methods are a bad trade off when the natural gas ultimately goes for foreign use.”

Special disgust deserves to be leveled upon the Republican captives of Big Oil, who voted to lift the export ban. The naïve global warming cultists believe that the Paris concord will replace the carbon-based fuel economy with some formula of renewable composition of energy.

Get real. People won’t be trading in their cars for bicycles any day soon. Tesla sports cars need to be juiced up with an electric jump start. Good luck on that one. The trusted Ford F-150 will be trucking around long after the lithium-Ion batteries fail to hold a charge, in the hybrid world of green orthodoxy.

With the clout that Big Oil demonstrated in the Congressional vote, the days of black gold will be pumping for a long time to come. Regretfully, the outflow from domestic wells may run dry sooner than prudent extraction dictates.

It seems that the mindset of the Saudi oil barons has affected the greed genes of the current J.R. Ewing’s. Alas, the John Ross’ of the clan cannot hold a candle to their patriarch daddy, Jock.

The same can be said about the shortsighted corporate czars that want to cooperate with the lunatics in foreign policy corridors of Washington in their destructive attempt to smash the Russian economy. In the end what America will get is one more step closer to her own bankruptcy and a barrel of dry sand clogging up the gears of commerce.

James Hall

Source: http://www.batr.org/corporatocracy/122315.html

Discuss or comment about this essay on the BATR Forum

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors

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