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America’s Oil Exports Are Booming — And Lifting Prices


The resurgence of the oil industry can be traced back to what happened in Congress one day in December 2015.

That’s when lawmakers ended the 40-year ban on U.S. oil exports. Crude pumped in Texas, Oklahoma and North Dakota could suddenly be shipped overseas.

At the time, excess supply was wreaking havoc on the energy industry. Too much American oil was sitting around in storage, pumped out of the ground but with no one to buy it. Crude eventually crashed to $26 a barrel.

But that glut is disappearing, thanks in part to booming oil exports from the United States. Crude that was once trapped inside the country is now going to Europe, Latin America and even China.

The United States exported a record 1.7 million barrels of oil per day in October 2017, according to the most recent stats from the Energy Information Administration. That’s four times as much as in 2015, when federal law prohibited shipping oil to most places except Canada.

“What happened is pretty dramatic,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. “It basically drained the U.S.”

us crude oil exports

The U.S. oil inventory — the crude that’s been pumped out of the ground but not yet sold — has dropped 15% over the past year, according to the EIA. Stockpiles have shrunk 10 weeks in a row, and are the smallest since February 2015.

All that excess oil in storage is finally moving to market now that American producers can export it. And as the country works through all that supply, the price is going up. Crude has spiked 9% this year and hit a three-year high of $66.66 a barrel on Thursday.

The end of the export ban is just one factor supporting the energy market. More consequential was the agreement by OPEC and Russia to rein in output. Crude prices have also benefited from the stronger economy,which creates more demand for oil, and the weaker U.S. dollar.

oil stockpile glut

Related: Russia, Saudi Arabia not worried about U.S. oil boom

Now that oil fetches a higher price, domestic producers are pumping more, especially from shale hotbeds like the Permian Basin of West Texas and New Mexico

And some of that oil is finding a home overseas. After Canada, the top destinations for American crude in 2017 were China (16.5%), Britain (11.3%) and the Netherlands (8.4%), according to the energy research firm ClipperData.

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