That proposed project would carry crude oil from Canada’s tar sands to refineries on the Texas Gulf Coast, so the influx of heavy crude from Mexico could play into a decision about whether the controversial pipeline is necessary. While denying some applications, it is approving the exchange with Mexico. Pemex, as the company is known, is hoping last year’s opening of Mexico’s oil industry to private competition will end a decade-long slide in crude production.
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The 1975 Energy Policy and Conservation Act, which created restrictions against exporting U.S. crude, states that the law shouldn’t interrupt the trading relationship between the U.S. and Mexico or stop oil exchanges made for convenience or transportation efficiency. The move is opposed by many Democrats and by environmental activists who fear it will lead to higher U.S. prices at the gas pump – a claim challenged by many economists – and encourage greater use of fossil fuels at the expense of cleaner, renewable energy sources.
The United States is now prohibited from exporting its crude oil due to an export ban that was established amid the Arab oil embargo in 1975. Lisa Murkowski (R-Alaska), approved a bill recently to lift the export ban completely. Apart from a limited exchange of oil for the U.S. strategic reserve in the late 1990s, Mexico has not had access to U.S. oil. The Commerce Department published guidelines on its website for such exports December 30, the first public explanation of the rules. The official also wouldn’t say which other nations have petitioned for U.S. oil shipments.
Companies involved in the trade with Mexico will also have to show that the same volumes of oil are being sold and bought.
The new opening may prove cold comfort for U.S. shale oil producers squeezed by a dive in U.S. crude prices to six-year lows near $40 a barrel. This amounts to about 1 percent of current U.S. production.
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