US set to export oil

U.S. oil producers are banned from exporting crude, but when they address it a little bit, they are able to ship it to foreign buyers.

And that’s what the hullaballoo is about today following the Wall Street Journal reported U.S. Commerce Department rulings that allow two companies, Pioneer Natural Resources (PXD) and Enterprise Products Partners (EPD) to export condensate, a hydrocarbon that can be turned into fuels.

“In separate rulings that haven’t been announced, the Commerce Department gave Pioneer Natural Resources Co. and Enterprise Products Partners LP permission to ship a kind of ultralight oil referred to as condensate to foreign buyers. The buyers could turn the oil into gasoline, jet fuel and diesel.”

Under the brand new rulings, condensate is defined as a petroleum product – making it immune to the ban on sending crude oil overseas. The private rulings were confirmed through the energy news blog Fuel Fix, which says the decision “tests the bounds of a long-standing ban on exporting U.S. crude.”

The site also notes the federal agency will need the condensate is processed, a minimum of to a small degree. Even though the brand new rulings may prod others to try to get similar exceptions to the ban, they might also shake up how condensate is categorized.

“There is widespread disagreement – even inside the oil industry – concerning how to define condensate. The ultra-light hydrocarbon generally flows as a liquid at normal temperatures even when it is a gas underground.

“Because of the varying definitions, it’s unclear how much condensate is produced inside the United States, though some energy experts say more than 1 million barrels are extracted daily.”

The new rulings are now being reported amid a backdrop of rising gas prices within the U.S., a situation attributed to new violence and uncertainty in Iraq. Those circumstances will most likely weigh on a possible political debate over the oil export ban.

“For months, top Federal government officials have signaled willingness to relax the export restrictions,” The Wall Street Journal says. “The softened stance will probably stir up opposition in Congress, where some lawmakers insist that Americans would take advantage of lower fuel prices when the government maintains the longtime export ban.”

In articles urging the U.S. to end its ban on oil exports, Blake Clayton of the Council on Foreign Relations wrote last summer that conditions had changed drastically since the ban was enacted in the 1970s – and much more so in recent years.