U.S. Loosens Ban on Oil Exports, Blessing Trade With Mexico

Mexican state oil company Pemex applied for the swaps in January, saying it wanted to exchange about 100,000 barrels a day – about 1 percent of United States output.

In addition, the Commerce Department has approved crude oil exchanges with Canada, which has also enjoyed unfettered trade for years.

“This loosening of the antiquated ban on U.S. oil exports is a major victory for those who, like myself, wonder why our country is hurting itself by not letting U.S. oil into the global marketplace”, she said in a statement.

The United States is now prohibited from exporting its crude oil due to an export ban that was established amid the Arab oil embargo in 1975.

As domestic oil production has surged past 9 million barrels a day amid a domestic energy revolution from shale formations, companies have feared a price crash here amid abundant supplies and sought ways to sell the oil in higher- priced foreign markets. U.S. refiners will continue to get Mexican heavy oil, a better match for them than the deluge of light oil coming from Texas and North Dakota. Pemex, as the company is known, is hoping last year’s opening of Mexico’s oil industry to private competition will end a decade-long slide in crude production.

Mexico applied for a crude oil swap eight months ago after the US signalled that it was ready to relax the rule, which has been put under pressure by the huge expansion of production.

The Commerce Department has also denied several swap applications with European and Asian.

President Barack Obama has the power to crack the door wider to oil exports, such as simply allowing exports to Mexico without the need for exchanges, or including shipments in upcoming regional trade deals. Critics say a full repeal could raise U.S. gasoline prices, although a slew of research studies suggest liberalizing trade would more likely lower the costs for U.S. consumers.

Hoeven and Heitkamp cited studies by the U.S. Energy Information Administration, the non-partisan Government Accountability Office supportive of lifting the ban.