GTFS: Global Trends and Future Scenarios Index

Energy 2020: North America – the New Middle East?


When it comes to crude oil and other hydrocarbons, the US is bursting at the seams. This situation is unlikely to stop even if prevailing prices for oil fall significantly – Citi anticipates that even if West Texas Intermediate (WTI) prices fell below $75 for a while, production growth would continue at relatively high levels for years to come.

While the debate in the United States intensifies over whether the country should export crude oil, facts on the ground are mushrooming significantly faster than policymakers in Washington recognize or global markets are ready to realize.

As of today, every barrel of locally produced petroleum product and crude oil – as well as the as-yet-to-be-defined category of condensate — that can get out of the country is in fact getting out. Too much attention has perhaps been placed on whether to lift the ‘ban’ on crude oil exports. There really is only a limited legal ban effectively impacting only oil produced in federal waters or transported through a federally mandated pipeline; elsewhere there is a minefield of obstacles but also a fairly permissive regulatory framework that already applies to Canada, is likely to be applied within a year to Mexico, and soon thereafter to some free trade agreement partners, even without legislation to lift the ban.

The US has very rapidly become a powerhouse as an exporter of finished petroleum products, natural gas liquids, “other oils” including ethanol, and – yes – even crude oil – with total gross exports expected to reach a combined 5-million barrels per day (m b/d) or more by the end of this year, up a stunning 4-m b/d since 2005. Mid-year 2014 combined hydrocarbon exports of 4.5-m b/d already pushed total oil exports to the top of the list of US exports by category, far surpassing all agricultural products, capital goods and even aircraft as the largest sector of US export trade. Meanwhile, US crude oil exports, largely to Canada, are 500% above what they were a year before, and are heading for around 500,000 barrels per day (500-k b/d) by year end.