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The oil tanker Angelica Schulte has left the Port of Houston, bound for France. It's bearing the second cargo of U.S. crude oil since Congress lifted the 40-year ban on oil exports in December. The first such cargo left the Port of Corpus Christi for Italy on New Year's Eve.
Oil prices are now at their lowest level in more than seven years. The main reason is that global supply far exceeds demand. So even with the export ban gone, U.S. oil producers expect foreign sales will be slow to take off.
"But as we look longer term and look for a recovery in the oil markets worldwide, we do expect that increasing volumes of U.S. crude oil would be exported," says Helen Currie, senior economist with ConocoPhillips. The Houston-based company supplied the cargo for the New Year's Eve shipment out of Corpus Christi.
"The quality of the light crude oil produced in the United States is very well suited to refineries, in not only the United States but in Europe and parts of Asia, as well as Latin America," Currie says.
Crude oil has long commanded a much higher price on international markets than here in the U.S. ConocoPhillips and smaller producers have argued they could earn more money for their oil if they could sell it overseas. They could then reinvest that money here at home.
"It's going to open up a lot of employment opportunities in both Eagle Ford and in Permian eventually, and a lot of jobs related to the development of oil, the movement of oil, and then ultimately in our port," says John LaRue, executive director of the Port of Corpus Christi.
What's good for oil producers, though, is not necessarily good for Houston-area refiners. Rising crude oil exports may mean falling exports of gasoline and diesel.
"When crude oil was banned from being exported to encourage production, [U.S.] producers offered a discount to refiners to move the oil," says Dave Cooley, an analyst with the Greater Houston Port Bureau, "and I think that will also erode as the export market for crude oil matures."
Since the export ban was lifted, the gap between foreign and domestic crude oil prices has indeed shrunk, as many producers hoped it would. But both prices remain stuck in the low $30 range.
