Velda Addison, Hart Energy

U.S. producers have unleashed a treasure of hydrocarbons from shale plays within the past few years, thanks to technology and tweaked techniques.

Further improvements could lead to even more production, but producers are finding themselves stuck—too much oil, not enough domestic demand and no permission to export unless they have a license to do so under certain international agreements or other restrictions. The U.S. government made a good move in December 2014 when it decided to allow companies to export condensate if it is run through a distillation tower, making it a petroleum product.

But it’s time for a bigger game changer. It’s time for the U.S. government to completely lift the oil export ban.

The ban was adopted in 1975 following the Arab oil embargo, but times have changed. The U.S. is no longer heavily dependent on other countries to fulfill its energy needs. Long gone are the days of gasoline rationing. Neither gasoline, oil nor natural gas prices are through the roof, which is good or not so good depending on whether you’re in a driver’s seat or a seat at an oil or gas company.

A bounty of production from shale plays has caused imports to drop drastically as exports of petroleum products have increased just as drastically. And this trend is expected to continue. Howard Gruenspecht, deputy administrator for the U.S. Energy Information Administration (EIA), shared production statistics and export forecasts—including data published in the EIA’s Annual Energy Outlook (AEO)—during Platt’s Benposium 2015 on June 9.

Here’s a snapshot of some of Gruenspecht’s key takeaways with AEO data:

  • Net energy imports have been declining since 2005, going from about 30 quadrillion Btu to about 10 quadrillion Btu today. Net imports of crude oil have fallen about 2.2. million barrels per day (MMbbl/d) from 2004 to 2015;
  • There is strong growth in domestic production of crude oil from tight formations through 2020, and limited growth in domestic demand after 2020 leads to a decline in net petroleum and other liquids imports. In the high oil and gas resource case, for example, crude oil production rises to 16.6 MMbbl/d in 2040, compared to a peak of 10.6 MMbbl/d in 2020 in the reference case. The U.S. becomes a net petroleum exporter in 2021 in both the High Oil Price and High Oil and Gas Resource cases.
  • Exports have been rising rapidly and this is expected to continue, but oil prices and demand remain major influential factors. From 2035 to 2040, energy exports account for about 23% of total annual U.S. energy production in the reference case. In the low economic growth case, the U.S. becomes a net exporter of energy in 2022, with energy exports equal to 4% of total domestic energy production in 2040.

But, as Gruenspecht said, prices matter and policy drives consumption.

“Demand is policy-driven,” he said, adding, “U.S. net exports of petroleum products vary with the level of domestic oil production given current limits on U.S. crude exports. It’s going to come out somewhere. It’s like pressing on a balloon.”

Otherwise, production will be impacted.

“For the most part, if you have free trade in products and restricted trade in crude and you have in the middle case a bonanza of domestic crude production, you would see a lot of growth in products … That’s one possibility,” he said.

The U.S. is already a leader in exports of refined oil products. There is little reason why the U.S. should not aim to become a leader in exports of oil, too. Lifting the ban could encourage producers to drill more in hopes of meeting energy demands here and elsewhere. Plus, it’ll add jobs and give the economy a boost.

IHS reported earlier this year that lifting the crude oil export ban could add $26 billion to $47 billion to GDP and support 124,000 to 240,000 jobs per year on average during the 2016 to 2030 period.

Contact the author, Velda Addison, at