NORTH DAKOTA: US politicians are pushing to lift the country’s ban on crude oil exports, a move that if successful would challenge Saudi Arabia’s long held dominance over the global oil market.
The US banned crude exports in the 1970s when a number of Arab countries refused to sell oil to the US in protest of its support for Israel in the 1974 Arab-Israeli conflict. The ban, led by Libya, sent prices soaring and led to fuel rationing across the country remembered by iconic photos of traffic jams of cars queuing to fil up at petrol stations. Since then the US has banned oil exports to lessen its reliance on foreign oil.
But with the US producing record amounts of oil, a number of politicians from newly oil rich North Dakota recently told Gulf News the ban should be lifted.
“Lifting the export ban is a possibility and the longer these low prices go we can get that done,” said Kevin Cramer, North Dakota’s Republican Congressman in an interview referring to last year’s collapse in oil prices last year.
“We are not going to be the price taker anymore, we’re going to be the price make,” Cramer said, who also wants to see a legislation passed on approving the long delayed Keystone XL pipeline that would stretch across the US from Canada to Mexico and could transport 100,000 barrels a days of North Dakotan oil.
Oil prices had sat above $100 a barrel for the best part of the last five years, which helped the US’ high cost shale industry drive the country’s record production that peaked at 9 million barrels a day last year compared to 5 million in 2006. The shale industry relies on high margins because it uses modern, expensive technology to extract oil from rocks deep underground in hard to reach places.
“The US energy industry and our free market principles are far better for us for stabilising the global market than to try and negotiate with a cartel,” said Cramer.
Patrick Hatlestad, a State Representative from the Republican Party, believes the ban should be considered and used as a bargaining chip with Saudi Arabia to soften their stance and let prices rebound. He said if Saudi Arabia was unwilling to listen; “then we are going to get into the world market and make a difference.”
Record US production has meant it has cut its reliance on foreign oil. The US no longer imports oil from Algeria and Nigeria and with the exception of a few periods of 2009 and 2010, imports of Saudi Arabia oil fell to their lowest point last year.
Calls for lifting the export ban are being echoed in North Dakota’s state legislature. North Dakota has been at the heart of the US’ shale boom with the state increasing production from just 100,000 barrels a day to 1.2 million in 2014, according to the North Dakota Petroleum Council, a group that represents the interests of over 500 companies working in the states oil industry.
“It just seems the time for that kind of restriction has passed and Congress should look forward,” said Connie Triplett, a State Senator from the Democrat party.
The states oil industry is backing calls for the export ban to be lifted, with its top lobby group believing that prices collapsed in response to the emergence of US shale, particularly the industry’s rapid growth in North Dakota.
“If we indicate that we are going to export oil even to our friendly nations, I think it has an immediate geopolitical impact that makes a difference that can make America the largest energy producer in the world as the driver of energy policy,” Ness added.
