NEW YORK, April 27 (UPI) -- Keeping U.S. crude oil "trapped" in the domestic market may be undermining the health of the shale industry, the top executive at Hess Corp. said.
Arab members of the Organization of Petroleum Exporting Countries stopped exporting oil to the United States in response to U.S. support for Israel in the 1970s. The U.S. Congress responded in kind by passing legislation restricting crude oil exports in part to protect the domestic market from overseas influence.
Nearly four decades later, those in the exploration and production side of the U.S. energy sector argue that policy is outdated in an era when domestic shale is leaving storage facilities overflowing with domestic crude oil.
"Part of the reason inventory has ballooned is that crude produced in the U.S. is literally trapped here, because American firms are not allowed to sell it overseas," John Hess, chief executive officer of Hess, wrote in a weekend editorial in The Wall Street Journal.
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Supporters of repealing the ban argue it would increase U.S. leverage overseas, while at the same time creating a source of domestic economic stimulus through jobs and lower energy prices. Hess argued that, with low oil prices forcing many in the U.S. industry to eliminate staff, lifting the ban would put the industry "back on its feet."
Most refineries in the United States are configured to process heavier grades of crude oil produced and imported from Canada, Mexico and Venezuela.
Last month, the American Fuel & Petrochemical Manufacturers organization found in an industry survey the U.S. refinery sector had enough processing capacity to handle the lighter grade of crude oil found in the United States.
Those on the refining side of the energy sector argue lifting the ban would mean higher costs, a cost that would make its way to consumer pocketbooks.
