Justin Mikulka | October 15, 2018
The U.S. Energy Information Administration (EIA) reported in September that crude oil exports are continuing to set records, mostly due to the fracking boom in the Permian Basin, in Texas and New Mexico. June exports hit a record 2.2 million barrels per day, while the monthly average was up almost 80 percent for the first half of this year compared to the same period last year.
And crude oil exports are supposed to double by 2020, according to the San Antonio News-Express. That’s a lot of oil — and almost all of it is fracked.
That should come as no surprise. In August 2015, my story for DeSmog, “Lifting Ban On U.S. Crude Oil Export Would Enable Massive Fracking Expansion,” pretty much sums up what is happening now. However, that’s not what the industry experts at the time were predicting.
Last year I noted how quickly these experts, from energy consultants to academics, were proven wrong in their predictions about the effects of overturning the 40-year-old ban, which occurred in December 2015.
If exports double by 2020, those experts will be that much more wrong. Perhaps the best example of this phenomenon is from a December 2015 newsletter from CME Group — a commodities trading group that stood to profit greatly from trading U.S. exported oil. The newsletter, which takes a question-and-answer format, included the following:
Question #2: Will lifting the crude oil export ban result in greater U.S. production?
The answer: No.
Couldn’t get more wrong that, but CME now lists U.S. WTI crude on its website as one of the top commodities it trades. I guess there’s a lesson here about whether to trust a commodities trader.
How About Those Gas Prices?
In a masterful move of public relations aimed at lifting the crude export ban, oil companies (and the many consultants and academic institutions funded by oil companies) argued one of the main reasons to lift the export ban was to help the American consumer.
The claim was that exporting U.S. crude oil would actually lower U.S. gas prices. While counterintuitive, the argument went that more oil on the global markets would lower global oil prices, which in turn would lower U.S. gas prices
How’s that working out?
In May 2018, U.S. gas prices reached the highest levels in years, followed by record crude oil exports in June.