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Jamie Webster - Energy Exports

Domestic oil production is booming, and many people in the industry want to lift the ban on U.S. crude oil exports.
Jamie Webster - Energy Exports

Jamie Webster - Energy Exports

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Show Details

Show 1438: Jamie Webster - Energy Exports
Air Date: September 21, 2014



Rob McClendon: Well, while oilfield equipment exports are booming, exports of crude oil are pretty well stagnant. That’s because when oil supplies ran short during the energy crisis of the 1970s, Congress responded by banning most exports of U.S. crude oil. Today, though, domestic oil production is booming, and many in the industry are asking for the ban to be lifted. At this year’s Governor’s Energy Conference, I sat down with the keynote speaker Jamie Webster to talk about whether lifting the ban could bring back the bad old days of shortages and paying more at the pump.

Jamie Webster: Well, we do export crude oil, but we just don’t export it freely. So we export around 250 to 300,000 barrels a day up to Canada, which is allowed by law. But what we don’t do is export it freely around the world as we do with petroleum products. So one is Nigeria. We now provide about 30 to 40 percent Nigerian petroleum products, but we’re not allowed to export oil there, and that is because of some policies that were put in place back in the ’70s as part of the price control program that was then put in place for the country at that time. And of course to have a price control policy you need to have kind of a closed system, so allowing oil to go could end up messing up that price control policy.

Rob: Now, this was a law put into place in the 1970s. What has that meant for us now that we’re into the second decade of the 2000s?

Webster: Sure. So that actually really hasn’t mattered a whole lot. Like, it hasn’t been -- really if the law had not been in place you probably wouldn’t have seen a big change in exports over the last couple of decades. With one exception, which is that last -- the last quarter of the year of 2013 you probably would have seen us exporting 200 to 300,000 barrels a day of oil out of the Gulf Coast into markets around the world. The reason for that is because the big boom in production that we’ve seen in the United States finally kind of hit its, uh, its point where it was really kind of impacting the refining sector where the refiners really needed to, uh, to reduce and provide and give discounts before they were willing to take in the light sweet oil that we were producing in the United States.

Rob: Now, I’d have to believe that this would be good for the energy industry. What would it mean for consumers?

Webster: So if we allowed crude oil exports, you would actually, our estimate is that you would actually see probably not much but about an 8-cent decline in gasoline prices – all of the things being equal.

Rob: And how is that with just the laws of supply and demand?

Webster: So the way that would work and why it doesn’t work right now is by allowing crude oil exports, it allows U.S. producers to receive full value for their crude. So they would get international prices. They get full value for their crude. They’re getting more money for their crude, so they end up producing more because, of course, more projects make more sense at that time. So that ends up increasing total global supply. So as you push that crude out into the world that increases total supply, that brings down the Brent Price, which is kind of the global marker that is up in the North Sea of Europe. And that is really what is mostly tied to global gasoline prices. So you’ll actually see global gasoline prices go down around 8 cents for the U.S. but also places like Singapore and other places that have free markets. So it will be a very good benefit not just for U.S. consumers but for the globe.

Rob: Jamie Webster, thank you for your insights.

Webster: My pleasure. Thank you.