U.S. Allows Limited Oil Exports to Mexico

New York Times – by Clifford Krauss

HOUSTON — The Obama administration on Friday gave oil companies temporary permission to export a limited amount of oil to Mexico at a time when a glut is cutting into domestic petroleum profits and employment.

The decision by the Commerce Department fell short of removing a ban on crude exports that goes back to the 1970s, when international oil boycotts produced long lines at gasoline stations and threatened the American economy. It also does not make a broad national security exception for Mexico, which has long existed for Canada, to release larger-scale exports.  

But support for an end to the ban is growing in Congress among Republicans and Democrats from oil states like Texas. The administration has been reluctant to remove the ban, although it has already given permission over the last two years to American producers to sell some extra-light forms of crude, called condensates, on a limited basis.

The oil industry lent cautious applause to the administration’s move, but repeated its calls for a complete end to the export ban.

“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.

The sales to Mexico will come in the form of swaps of different grades of oil. American refineries on the Gulf of Mexico are built for the heavy oil produced in Mexico and Canada, while Texas and Oklahoma shale fields near refineries in those states are producing an abundance of light oil.

The Mexican market could help relieve a glut that threatens to overwhelm American storage facilities once the summer driving season is over. Mexico could benefit from importing the lighter American crude, which it could blend with its domestic product to make it easier and cheaper to refine locally.

The approval signals growing energy coordination between Washington and Mexico City, with Mexico moving forward with a sweeping reform that will allow foreign companies increasing latitude to invest in Mexican energy. Exports of American natural gas are also increasing, partly relieving a gas production glut in Texas.

But the Obama administration is unlikely to lift the export ban entirely, in part because environmentalists say it would encourage more petroleum development and hydraulic fracturing at a time when the nation should be pivoting away from fossil fuels to curb climate change. Some domestic refiners argue that removing the ban would increase gasoline prices, a contention disputed by producers who contend that more American oil on international markets would actually bring energy costs down.

Senator Edward J. Markey, a Massachusetts Democrat who strongly endorses a continuation of the export ban, said that the administration’s decision to allow swaps with Mexico represented more of a continuation of current policy than a break with it.

“Today’s action by the Commerce Department to approve a small, temporary swap of oil with Mexico,” he said, “shows that there is already sufficient flexibility under the U.S. oil export ban.”


2 thoughts on “U.S. Allows Limited Oil Exports to Mexico

  1. But the price of gas remains near $3 per gallon.

    Just resource theft, plain and simple. They’re robbing all they can from this country before they run it down the tubes.

  2. The Midwest has THE largest oil deposits in the entire world… more than ALL the M.E. countries combined.

    They’re saving it for a rainy day, however.

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