FINANCIAL TIMES: …The sale of US crude overseas is governed by the Export Administration Act of 1979, which allows the president to prohibit or curtail the export of commodities – namely crude – deemed to be in “short supply”. Exceptions do exist, but for the most part US producers are hopelessly constrained in their capacity to export domestic crude to countries other than Canada and Mexico.
US businesses have adapted by exporting refined products – which are not restricted under US law – instead of crude. The US refining industry has in effect become a conduit for crude oil exports, allowing rising US crude production to be exported in product form. In just seven years, the US has tripled the amount of products it exports, transforming itself from the world’s top product importer to second-largest product exporter, surpassed only by Russia…
While new pipeline links, supplemented with increasingly efficient railroad links, will give producers short-term relief from depressed prices, new export outlets will ultimately be necessary to leverage the full potential and reap the benefits of the new American oil revolution… (more)
