US eases crude oil export ban; allows trading with Mexico
By Josh Lederman, Aug. 14, 2015 3:34 PM EDT
EDGARTOWN, Mass. (AP) — The Obama administration approved limited crude oil trading with Mexico on Friday, further easing the longstanding U.S. ban on crude exports that has drawn consternation from Republicans and energy producers.
Mexico’s state-run oil company Petroleos Mexicanos, or Pemex, had sought to import about 100,000 barrels of light crude a day and proposed a deal last year in which Mexico would trade its own heavier crude for lighter U.S. crude. A major crude exporter for decades, Mexico has seen its oil production fall in recent years.
The license applications to be approved by the U.S. Commerce Department allow for the exchange of similar amounts of U.S. and Mexican crude, said a senior Obama administration official, who wasn’t authorized to comment by name and spoke on condition of anonymity. The official didn’t disclose whether all 100,000 barrels requested would be allowed.
While the Commerce Department simultaneously rejected other applications for crude exports that violated the ban, the move to allow trading with Mexico marked a significant shift and an additional sign that the Obama administration may be open to loosening the export ban. Exchanges of oil are one of a handful of exemptions permitted under the export ban put in place by Congress.
The export ban is a relic of the 1970s, after an OPEC oil embargo led to fuel rationing, high prices and iconic images of long lines of cars waiting to fuel up. But Republicans, including House Speaker John Boehner, have said those days are long gone, arguing that lifting the ban could make the U.S. an energy superpower and boost the economy.
Republicans from energy-producing states hailed the decision, as did trade groups representing the oil industry. Sen. Lisa Murkowski of Alaska, who has pushed for lifting the ban, called it a positive step but added that she would still push for full repeal “as quickly as possible.”
“Trade with Mexico is a long-overdue step that will benefit our economy and North American energy security, but we shouldn’t stop there,” said Louis Finkel, executive vice president of the American Petroleum Institute.
But environmental groups have opposed lifting the ban out of concern it would spur further drilling for crude oil in the U.S. Pemex’s proposal has also drawn criticism in Mexico, where residents are sensitive about the country’s falling oil production despite warnings from officials that Mexico could become a net importer if it doesn’t explore new oil reserves.
The move to trade crude with Mexico comes as the Obama administration weighs a long-delayed decision about whether to approve the Keystone XL pipeline. That proposed project would carry crude oil from Canada’s tar sands to refineries on the Texas Gulf Coast, so the influx of heavy crude from Mexico could play into a decision about whether the controversial pipeline is necessary.
Last month a Senate panel approved a bill championed by Murkowski that would lift the 40-year-old-ban — plus open more areas of the Arctic, Gulf of Mexico and the Atlantic Ocean to oil and gas exploration. No Democrats on the committee voted for the bill. The environmental group Oceana called it “a massive give-away to Big Oil.”
Iran agreement could spell end to limits on U.S. oil imports
By Emily Schwartz Greco, July 29, 2015
What a relief. In exchange for Iran taking steps to guarantee that it can’t build nuclear weapons, the sanctions that have choked off its access to world markets will end without a single shot.
Instead of celebrating this diplomatic breakthrough, conservative lawmakers are plotting to scuttle the pact. And despite their opposition, some Republicans are milking this accord for a pet project: ending all limits on U.S. crude sales.
“Any deal that lifts sanctions on Iranian oil will disadvantage American companies unless we lift the antiquated ban on our own oil exports,” Alaska Senator Lisa Murkowski declared a few weeks back.
It’s an enticing argument. Why should Washington help Iran freely sell its oil while denying the U.S. industry the same liberty?
Well, the ban is already punctured. The United States, which imports 7 million barrels a day of crude, also exports half a million barrels of it every 24 hours.
And most of that oil goes straight to Canada by rail or gets hauled to ports by trains after getting extracted from North Dakota’s landlocked Bakken fields.
Remember that oil train that derailed two years ago in the Quebec town of Lac Megantic, unleashing an inferno that burned for four days and killed 47 people? It was ferrying exported Bakken crude.
Smaller accidents are happening too. Most recently, an oil train derailed near the tiny town of Culbertson, Montana, spilling thousands of gallons of oil from North Dakota.
Ramping up exports would only boost the chances of a major disaster, Oil Change International Executive Director Steve Kretzmann says.
That’s why the restrictions, imposed by Congress during Gerald Ford’s presidency to boost energy independence, should remain unless the government creates better safeguards.
Besides, Iranian oil sales won’t begin bouncing back until early next year at the soonest as diplomats must first verify compliance with nuclear obligations. But there’s no doubt that more crude will eventually gush from that Middle Eastern country.
Prior to the 1979 revolution that brought a theocratic government to power, Iran was exporting 6 million barrels a day — quadruple current levels. By 2008, amid lighter sanctions, it was only shipping 3 million barrels a day overseas. Seven years later, that figure has been halved again.
Iran’s got between 30 and 37 million barrels stored and ready to sell before it even re-starts wells that were shut down when sanctions tightened. As Iran sits atop some 158 billion barrels of oil, the world’s fourth-largest reserves, its potential is huge.
Will American companies, which can freely export value-added oil products like gasoline, lose out if they can’t ship more crude overseas? Not really.
Money spent beefing up infrastructure could be wasted if Iran dislodges new markets. Nixing export restrictions could boost production by half a million barrels daily, but many North American wells won’t make financial sense if the Iran gusher adds to the global glut responsible for slashing oil prices over the past 12 months.
Goldman Sachs analysts expect U.S. oil prices to hover around today’s $50-a-barrel mark for at least another year. If they’re right, many North Dakota and Texas fracking sites won’t be viable anyway.
And why are prices slumping? Domestic output has nearly doubled under President Barack Obama’s leadership to 9.7 million barrels a day. The United States now drills more oil than Saudi Arabia despite the White House’s calls for climate action.
While the leaky ban does chip away at U.S. prices, it’s not as if the Obama years have been a bust for oilmen.
And regardless of whether the industry gets the freedom Murkowski seeks, the United States, Iran, and the rest of the world must figure out how to get by on less oil.
Columnist Emily Schwartz Greco is the managing editor of OtherWords, a non-profit national editorial service run by the Institute for Policy Studies.
Repost from The Center for Investigative Reporting and KUOW.org [Editor: This is an important report. State regulators can’t get accurate oil train data from the federally regulated railroads, so Washington officials are turning to the refineries: “Washington state lawmakers passed a law recently that requires oil refineries, which are state regulated, to give weekly notice of the train schedule to first responders.” (See previous report.) The story of Dean Smith’s Train Watch is inspiring – we should set up annual counts in all of our frontline refinery communities. – RS]
Growing oil train traffic is shrouded in secrecy
By Ashley Ahearn / June 13, 2015
Dean Smith was frustrated with the lack of public information about oil train traffic so he organized 30 volunteers to count the trains coming through his community north of Seattle. Credit: Ashley Ahearn/EarthFix/KUOW
EVERETT, Wash. – Dean Smith, 72, sits in his car by the train tracks here north of Seattle.
It’s a dark, rainy Tuesday night, and Smith waits for an oil train to come through town. These trains are distinctive: A mile long, they haul 100 or so black, pill-shaped cars that each carry 30,000 gallons of crude oil.
Smith has been counting the trains for about a year, noting each one on a website he built. The former National Security Agency employee does it because the railroads share little information about oil train traffic with Washington state. They don’t have to because they’re federally regulated.
Listen to this story
What is known: The railroads are moving 40 times more oil now than in 2008 due to an oil boom in the Bakken formation of North Dakota. Bakken crude oil contains high concentrations of volatile gas, with a flashpoint as low as 74 degrees Fahrenheit.
Derailments and explosions have occurred around North America since the oil boom began, including a 2013 catastrophe that killed 47 people in rural Quebec.
This has prompted emergency responders to call for more information from railroad companies about oil train traffic patterns and volumes. The railroads mostly have refused; they say that releasing that information could put them at a competitive disadvantage.
Which is why Smith decided to find out for himself. “It’s pretty hard to hide an oil train,” he said with a chuckle.
Last year, Smith launched the first Snohomish County Train Watch. He organized 30 volunteers to take shifts counting trains around the clock for a week.
In their first week of watching oil trains, the group collected more information about oil train traffic than the railroads had given Washington in the three years the trains have come here.
State officials say Smith’s data is helpful but insufficient. They say they shouldn’t have to rely on citizen volunteers to get critical information in case of disaster.
Dave Byers, the head of spill response for the state’s Department of Ecology, said his team needs the information to plan area-specific response plans to protect the public and keep oil from getting into the environment.
“It gives us an idea of what the risk is, the routes that are taken,” Byers said. “The frequency and volume of oil really gives us an idea of what level of preparedness we need to be ready for in Washington state.”
Oil train traffic shows no signs of slowing, which adds to the state’s sense of urgency. The oil industry wants to build five new terminals in Washington to move crude oil off trains and onto ships.
Meanwhile, Congress is considering legislation to lift a federal ban on exporting crude oil that’s been in place since 1975 – allowing American crude to be shipped around the world.
Close call in Seattle
Anyone who has attended a Mariners baseball game in downtown Seattle likely has seen or heard oil trains passing the ballpark. The trains continue north through the city to refineries on Puget Sound.
Seattle had a close call last year when an oil train derailed near downtown.
Byers and his team weren’t notified for one and a half hours and initially were not told there was oil in the derailed train cars.
No oil was spilled, but Byers is critical of how BNSF Railway, the company that moves most of the oil out of the Bakken oil fields, handled the situation.
BNSF did not tell the state there was highly flammable Bakken crude oil in the derailed train cars – that information came five hours later from the oil refinery waiting for the train. Additionally, Byers said that when his team arrived on the scene, no BNSF representative was present, but welders were working on the derailed cars. The welders said they did not know what was inside.
“We became concerned because people were wandering off the street and taking selfies of themselves next to the rail cars,” Byers said. “There was no preparing for the potential that one of those cars could actually start leaking.”
BNSF spokeswoman Courtney Wallace said in an emailed statement that BNSF Railway had its hazardous materials team quickly in place to evaluate the situation. “This derailment did not cause a release at any point, nor was there a threat of a release,” she said.
The state and BNSF Railway have sparred over the railroad company’s reports of hazardous materials spills. Earlier this year, state regulators released an investigation and recommended that BNSF be fined up to $700,000 for not quickly reporting these spills. The company has disputed the state’s findings. A final decision is expected next year.
Concern in Anacortes
This spring, several hundred people packed into the Anacortes City Hall for information from oil companies and BNSF Railway about the oil trains moving through their community. Just that morning, a BNSF oil train had derailed and caught fire in North Dakota.
In northern Puget Sound, Anacortes is home to two refineries that receive oil by rail from North Dakota. Its residents, like others in small communities along the tracks in Washington state, have voiced concern about oil trains. Congestion woes are among their complaints; unlike Seattle, where the trains mostly pass through tunnels and over bridges, trains here disrupt traffic.
Audience members were allowed to submit written questions only. Oil refineries’ representatives told them about safety precautions at their facilities to prevent and respond to spills. They also talked about their commitment to getting newer oil train cars.
Wallace, the BNSF spokeswoman, gave a presentation about the company’s commitment to safety. She said BNSF believes that every accident is preventable.
When pressed by a reporter about how much information BNSF shares with local emergency responders, Wallace said BNSF has “always provided information to first responders, emergency managers about what historically has moved through their towns.”
She cautioned that sharing regular updates or notifications of oil train movements could put the public at risk.
“We’re always cognizant of what information is shared, because we don’t want to see an incident that involves terrorism or anyone else who might have that kind of frame of mind,” Wallace said.
Fight for information
A federal emergency order demands that railroads share limited information with states – but state officials want more.
Washington state lawmakers passed a law recently that requires oil refineries, which are state regulated, to give weekly notice of the train schedule to first responders.
State Rep. Jessyn Farrell, a Seattle Democrat who sponsored the bill, said BNSF and the oil industry opposed the legislation from the beginning.
“We’re going to get the information,” she said. “I don’t really care who gives it to us as long as it’s good information and it stands in court, because we need that information now.”
BNSF Railway spent more than $300,000 on lobbyists and political contributions in Washington state in 2014.
“I think they’re absolutely on the wrong side of this,” Farrell said. “In the public mind, and morally, they are absolutely wrong.”
BNSF’s Wallace said the company still is reviewing the law to see how federal regulatory authority will interact with state authority.
Back in Everett, Dean Smith said he isn’t waiting for politicians or lawyers to duke this one out.
Instead, he’ll wait for trains, he said, and he’ll continue gathering information about them.
Four hours into a recent train-watching shift, Smith perked up.
“There’s something coming,” he said. He opened the door of his Chevy Volt and stepped into the rain. An orange BNSF engine emerged from the tunnel. Behind it were oil cars – about 100 of them, black as night.
The streetlight reflected off Smith’s glasses and shadows gathered in the furrow of his brow as he stood by the tracks, shoulders hunched.
“Sometimes I wonder, why fight it? Why not just move? That’d be the easiest thing to do,” he said. “But I think we have to fight. And I would like to see citizens groups acting like this all over the country. That’s the form of checks and balances we can create. All it takes is a few people.”
Repost from onEarth, Natural Resources Defense Council
Whatever Shall We Do with All this Extra Oil?
Oil companies want the crude-export ban lifted. Is that a good idea?
By Brian Palmer | December 13, 2014
If oil industry lobbyists didn’t have so much money, Congress would get pretty sick of them. They’re constantly whining. They don’t like the carbon pollution rules. Fuel-economy standards are too tight. Something about a pipeline from Canada. Today, they’re back on Capitol Hill moaning about the crude-export ban.
What’s that you say? You’ve never even heard of the crude-export ban? Well, now you have, and I’ve compiled a few FAQs for you.
What does the ban say?
The short answer: Crude oil drilled in the United States must be refined in the country. But as with most laws, there are exceptions. Companies can export oil to be refined in Canada as long as the products are sold there or back to the States. Some Alaskan crude has been exported. And a particular kind of heavy crude from California can be sent abroad because presidents George H.W. Bush and Bill Clinton decided it was in the national interest. Such exceptions can be significant: Total exports peaked at 104 million barrels in 1980, representing about 3 percent of total U.S. extraction that year. In recent years, though, that number has fallen below 50 million barrels.
That law’s been around since the 1970s. What’s the big deal now?
Well, we’re talking about an industry in which greed is considered good. Money, of course! Until recently, energy companies weren’t drilling enough oil to make a big splash on the international market. But U.S. production surged by nearly 50 percent between 2008 and 2013, and those CEOs now think they can take home even bigger bonuses if they’re allowed to sell abroad.
Why was it created in the first place?
Basically because the Arab members of the Organization of Petroleum Exporting Countries got mad that the United States and a few other countries were siding with Israel during the 1973 Arab-Israeli War—and cut production and banned petroleum exports to those nations. The price of crude quadrupled, causing a five-month-long oil crisis that majorly disrupted global commerce and American lives. Since then, energy independence has been a goal for every U.S. president; Gerald Ford, for example, signed the 1975 Energy Policy and Conservation Act, which prohibited most crude exports and established a national strategic oil reserve.
Will I pay more for gas either way?
The ban certainly depresses the price of U.S.-produced crude oil, but gas prices involve a lot of factors. Energy analysts and industry advocates have debated the ban’s effects for years. So, in an attempt to settle the argument, the somewhat more impartial U.S. Energy Information Administration recently published a report on what would happen to gas prices if exports were allowed. You can read it here if you’re an oil-price wonk. Here’s the short version, from the organization’s administrator, Adam Sieminski: “[I]t probably wouldn’t do a great deal one way or the other with gasoline prices.”
Apparently, when it comes to economics, the controversy has more to do with profits than your family budget.
What would it mean for the climate if we allowed the exports?
It might be bad news. In an era of high domestic production, the ban holds down the price of West Texas Intermediate, North America’s benchmark crude, which then keeps Canada’s tar sands crude prices low. (The price points of the two crudes move roughly in sync.) So if Congress lifts the ban, the tar sands industry, which is currently in a major funk, could be saved—and this would mean a lot more extraction of the most carbon-intensive fossil fuel source around.
That’s the theory. And a March study from Oil Change International supports it: The report concluded that allowing exports would result in added carbon emissions equivalent to the output of 42 coal plants. The factors influencing global oil prices are complex, though, so it’s difficult to say exactly how much fossil fuel the crude-export ban is keeping in the ground.
The lack of certainty, however, makes its own point. Before Congress even considers repealing a 39-year-old law dealing directly with fossil fuels, it ought to understand the implications for climate change. It’s appalling that politicians would consider lifting the ban without full information. But I guess they’re not scientists.
EDGARTOWN, Mass. (AP) — The Obama administration approved limited crude oil trading with Mexico on Friday, further easing the longstanding U.S. ban on crude exports that has drawn consternation from Republicans and energy producers.
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