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January 7, 2014 11:17 pm
America’s domestic energy revolution helped drive a decline in the US trade deficit to its lowest level in four years, bolstering calls in Washington for the Obama administration to relax decades-old restrictions on the export of crude oil.
The improvement in America’s monthly trade gap – to $34.3bn in November from $39.3bn in October – prompted some economists to increase fourth-quarter US growth estimates, reinforcing confidence in the country’s economic recovery.
JPMorgan said the trade data were more consistent with 3 per cent growth than 2.5 per cent growth, while Morgan Stanley lifted its fourth-quarter growth estimate to 3.3 per cent.
The government’s Energy Information Administration predicted on Tuesday that the US oil boom would continue, driven by rising production of shale oil unlocked by advances in horizontal drilling and hydraulic fracturing or “fracking”.
The EIA forecast that in 2015 US oil output could approach its record high of 9.6m barrels per day, reached in 1970.
Adam Sieminski, the EIA’s administrator, said: “The growth in domestic production has contributed to a significant decline in petroleum imports.”
The share of total US liquid fuels consumption met by net imports is expected to fall to just 24 per cent in 2015, down from 60 per cent in 2005.
The contribution of the energy sector to an improvement in America’s balance of trade and its economic outlook was trumpeted by representatives of the US oil and gas industry as a reason to lift remaining restrictions on exports of their products.
While the Obama administration has already given the green light to some exports of liquefied natural gas, strict controls on crude oil exports dating back to the days of the oil embargo in the 1970s remain in place.
Jack Gerard, president of the American Petroleum Institute, the biggest oil industry lobby group, said in Washington: “Some of these prohibitions, or policies, are vestiges of the past. We need to get our mindset away from scarcity.”
Mr Gerard urged the Obama administration to “consider and quickly review” lifting the restraints on crude exports, adding that “action should be taken” to prevent the ban from holding back oil production.
Some of these prohibitions, or policies, are vestiges of the past. We need to get our mindset away from scarcity
- Jack Gerard, president of the American Petroleum Institute
His call was echoed by Lisa Murkowski, a Republican senator from oil-rich Alaska and her party’s top member on the Senate energy committee, who said the restrictions were “inefficient” and could cause “supply disruptions”.
Ernest Moniz, the energy secretary, said in December that the matter deserved “new analysis and examination”, raising hopes that the administration might be open to lifting some of the crude export restrictions. The White House is struggling to meet its self-imposed goal, set in 2010, to double overall exports by 2015.
The export ban has helped hold down the price of crude onshore in the US relative to internationally traded oil, benefiting US refineries which are free to sell oil products on world markets.
The value of US fuel and petroleum product exports rose to $113.7bn in the year to November 2013, compared to $105.7bn in the same period of 2012. Meanwhile, the value of crude oil imports into the US dropped from $290.4bn to $250.6bn over the same timeframe.
Mr Gerard said: “Today we’re the single largest export sector in our economy and that has happened because we’ve been able to develop resource, in this case refine the resource, and put it into the export market.”
Bill Day of Valero Energy, one of the largest American independent refining groups, said opening up crude oil for “unlimited” exports would push up the cost of fuel for US consumers.
“Since the sole reason to allow crude oil exports would be to give oil producers access to higher world prices, greater exports would lead to higher domestic oil prices,” he said.
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