Amidst the overshadowing election events, a Texas company defied the norm and exported domestic oil to a foreign customer, despite the government ban on exporting crude oil. This ban has been in effect since the 1970’s Arab Oil Embargo crisis. The company, BHP Billiton, struck a deal to sell $50 million worth of a lightweight-oil called condensate to foreign purchasers without government approval. This is the first instance where a company has exported US crude oil without the consent of the government. Since the 1970 ban, the US has kept all crude oil within the country and as a result created a huge surplus in storage. With all of this extra oil build up, companies have been longing to sell it and remove the ban. However, this could have big implications for US consumers of oil.

The ban of crude oil exports originated in the 1970’s during the Arab Oil Embargo crisis, and there have rarely been exceptions. This past summer, two major companies received permission from the Department of Commerce to ‘lighten up’ crude oil to create condensate that would qualify for exporting. Involved suppliers of these companies, specifically BHP, have taken these same steps to produce the proper and qualified mix, but have exported it without formal government approval. These suppliers are trying to find new markets and better prices for newfound crude oil volumes in the US. Since the US has increased oil production and found new methods of retrieving crude oil through racking and oil shale, the abundance of production has caused a decline in oil prices. Companies are feeling the pressure on small profit margins and want to search for new customers overseas in hopes of finding higher prices.

US companies are beginning to find loopholes and are pressuring the US government to lift the ban for these reasons. Positive economic arguments for this can be found in studies from the Government Accountability Office. Such advantages stem from being able to expand and develop a booming domestic energy industry. This could lead to job creation and also decrease the US trade deficit. Other studies conducted by oil industry lobbyists found that an additional 300,000 jobs could be created and another $38 billion dollars could be added to GDP by 2020 if the ban is lifted. However, it remains unclear whether selling oil overseas will put downward pressure on gas prices thus making consumers happy or an upward pressure that would pass costs to consumers. Another problem arises regarding the reality of the market and finding buyers for the high prices companies are currently seeking.

Nonetheless, the first export of crude oil without government consent poses a conflicting problem for the current government and the future outlook of the US Oil industry. Will this new pressure influence the government to eventually drop the oil ban and let companies export oil freely, or will the government stand its ground and enforce the ban?

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