US eases oil export ban
US eases oil export ban

[JURIST] The US Department of Commerce [official website] on Friday agreed to allow limited crude oil trading with Mexico, easing a ban on crude exports that has been in place for 40 years. Members of the US Congress was informed by the Department of Commerce [official website] that it plans to approve [WSJ report] an application by Petroleos Mexicanos (Pemex) [corporate website, in Spanish], Mexico’s state run oil company, to trade heavy oil pumped in Mexico for light crude pumped in the US. Despite applications from less than a dozen other countries, which were denied [Bloomberg report], Canada is the only other nation currently exempt from the ban. Unlike the trade agreement with Mexico, however, Canada is not required to import similar crude quantities to the US. An end to the ban has been called for by both members of Congress and oil producers, including Exxon Mobil Corp [corporate website].

While the ban on exporting crude oil from the US has been in place for 40 years, the exporting of oil has still proved to be a contentious topic in recent years. In March the US Senate failed to override President Barack Obama’s veto of the Keystone XL Pipeline Approval Act, a proposal that had generated significant controversy [JURIST reports]. Expansion [WP report] of the existing Keystone pipeline would allow for the transmission of 830,000 barrels of crude oil daily from the tar sand producing regions of Alberta, Canada to refining facilities on the Gulf of Mexico. TransCanada [corporate website], the company seeking to build the pipeline, indicates [project website] that this development would support crude oil production in the Bakken Shale formation, which lies primarily in North Dakota and Montana, and that it is crucial to energy security in the US. Under US law, TransCanada must receive a permit from the US Department of State [official website] because the project crosses the US-Canada border. According to the State Department, Executive Order 13337 [text; PDF] grants the Secretary of State “the power to decide whether a project serves the national interest before granting a Presidential Permit.” If a presidential permit is granted, construction of the project can commence.