Academic journal article Houston Journal of International Law

Talk Is Cheap, So Is Oil: Where Do We Go Now That We've Lifted the U.S. Crude Oil Export Ban

Academic journal article Houston Journal of International Law

Talk Is Cheap, So Is Oil: Where Do We Go Now That We've Lifted the U.S. Crude Oil Export Ban

Article excerpt

I.   INTRODUCTION  II.  BACKGROUND      A. A Brief History of U.S. Oil      B. The Status Quo of the U.S. Oil and Gas         Industry  III. ANALYSIS      A. The Supply Glut      B. Weak Demand      C. Why Should We Care?      D. Time to Negotiate  IV.  CONCLUSION 

"By fighting you never get enough, but by yielding you get more than you expected." (1)

I. INTRODUCTION

"Drill, baby, drill!" the chant of the Republican Party since 2008, is used to express both Republican and public sentiment for increased oil and gas production within the United States. (2) But with increased oil and gas production comes a glut of excess supply. (3) On August 14, 2015, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) decided to allow oil swaps between the United States and Mexico. (4) This landmark decision has sparked discussion about lifting the U.S. crude oil export ban as a solution to the excess supply of light, sweet crude produced domestically. (5) Supporters of lifting the crude oil export ban argue that the policy is antiquated, creates detrimental consequences to both oil producers and consumers, and creates inefficiencies to U.S. refining capacity. (6) Conversely, opponents of lifting the crude oil export ban argue that lifting the ban would hurt U.S. energy security; increase prices of gasoline, hurting consumers; potentially increase the total level of greenhouse gas emissions; and hurt U.S. refineries who benefit from low crude oil prices. (7)

On December 18, 2015, after much debate, Congress passed and President Barack Obama signed into law a $1.15 trillion spending bill that included provisions to lift the decades-old U.S. crude oil export ban. (8) This Comment attempts three things. First, it will briefly discuss the legislative history of the U.S. crude oil export ban and its reversal. Then, it will discuss the current world market conditions of oil and how, despite a complete policy reversal of the crude oil export ban, U.S. crude oil exports will not be a likely reality anytime soon. Lastly, it will argue that while lifting the U.S. crude oil export ban is a step in the right direction, the United States must attempt to coordinate with other oil-producing countries in order for true global energy stability to be realized.

II. BACKGROUND

In 1859, Edwin Drake drilled the first commercially producing oil well known as the "Drake Well" in Titusville, Pennsylvania, just two years prior to the start of the American Civil War. (9) The modern petroleum industry, however, did not launch until the infamous Spindletop well was drilled in Beaumont, Texas in 1901; this spurred innovation of new oilfield technologies that changed both the American transportation and oil and gas industries forever. (10) This began the American addiction to "black gold." (11)

A. A Brief History of U.S. Oil

In the 1940s, U.S. oil consumption surpassed oil production for the first time and the United States began to import oil from other nations in order to satisfy its appetite for black gold. (12) Most U.S. oil imports arrived from the Middle East. (13) Later, Middle Eastern oil-rich nations formed the Organization of the Petroleum Exporting Countries (OPEC) in order to coordinate and strengthen their energy industries. (14)

The symbiotic relationship between the United States and its trading partners in OPEC continued until 1973, when the United States declared support of Israel in its war with Egypt and Syria. (15) Due to their political differences, OPEC cut off its supplies of crude oil to the United States in an event known as the Arab Oil Embargo. (16) Simultaneously, OPEC announced that its oil producing nations would cut back on oil production, thus decreasing the existing global supply and raising the posted price of oil." American consumers immediately felt the effect of the oil embargo. Long lines formed at gas stations across America due to the fear of a gasoline shortage. …

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