U.S. Crude Oil Export Policy:
Background and Considerations

Phillip Brown
Specialist in Energy Policy
Robert Pirog
Specialist in Energy Economics
Adam Vann
Legislative Attorney
Ian F. Fergusson
Specialist in International Trade and Finance
Michael Ratner
Specialist in Energy Policy
Jonathan L. Ramseur
Specialist in Environmental Policy
March 26, 2014
Congressional Research Service
7-5700
www.crs.gov
R43442


U.S. Crude Oil Export Policy: Background and Considerations

Summary
During an era of oil price controls and following the 1973 Organization of Arab Petroleum
Exporting Countries oil embargo, Congress passed the Energy Policy and Conservation Act of
1975 (EPCA), which directs the President “to promulgate a rule prohibiting the export of crude
oil” produced in the United States. Crude oil export restrictions are codified in the Export
Administration Regulations administered by the Bureau of Industry and Security (BIS)—a
Commerce Department agency. The President has some powers to allow certain crude oil exports
if an exemption is determined to be in the national interest.
In 2009, a decades-long U.S. oil production decline was reversed due to the application of
advanced drilling and extraction technologies to produce tight oil. The Energy Information
Administration (EIA) 2014 reference case projects that total U.S. crude production will be 9.6
million barrels per day by 2019—up from 7.7 million in 2013. Nearly all of this growth is
expected to come from tight oil production. This anticipated growth is resulting in calls to lift or
otherwise ease U.S. crude oil export restrictions. However, crude oil imports are projected to
range from 6 million to nearly 8 million barrels per day for the period out to 2040. This apparent
disconnect between import needs and the desire to export can be explained when considering the
following: (1) geographic location of tight oil, (2) tight oil quality characteristics, (3) refinery
configurations, (4) oil transportation network, and (5) price discounts in different regions.
EIA’s reference case also projects that tight oil production will decline after 2019, raising
questions about the potentially temporary nature of the export opportunity. However, EIA’s high-
growth case projects tight oil production growth out to 2040. There is a degree of uncertainty
associated with long-term tight oil projections.
Tight oil produced in the United States is generally of the light/sweet (low sulfur) variety, referred
to as light tight oil (LTO). Expected LTO volumes could potentially result in an oversupply of
light crudes in certain regions, such as the Gulf Coast where refineries are currently configured to
process heavy/sour crudes and yield certain volumes of specific oil products (e.g., diesel and
gasoline). Timing for a potential LTO oversupply situation is uncertain. Some analysts estimate
that it could occur as early as 2015. However, the oil industry is dynamic. It will adjust based on
market and economic considerations (e.g., price discounts, product values, and investment
requirements). For example, refineries can add equipment to process additional light crude
volumes. Transportation modes (i.e., pipeline, rail, and marine vessels) can adapt to deliver LTO
to refineries throughout the country. While investments in equipment could allow refiners to
process more LTO, economic considerations will likely dictate how much additional LTO will be
absorbed domestically. Condensate, an extra-light hydrocarbon, is of particular concern to some
oil producers because of its limited domestic marketability, increasing production volumes, and
inclusion in the BIS crude oil definition.
There are several issues that Congress may consider associated with exporting U.S. crude oil. Of
particular interest may be how allowing exports might affect crude oil prices. These effects are
likely to be threefold: (1) domestic prices for exported oil will likely converge towards the world
price, (2) U.S. benchmark prices will likely adjust to world prices, and (3) world prices will likely
adjust to reflect added supplies. The magnitude of these price effects will depend on export
volumes. Product price (i.e., gasoline) effects may be mixed and could differ by region.
Additional considerations that may be of interest to Congress might include potential impacts on
energy security, geopolitics, international trade, and the environment.
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U.S. Crude Oil Export Policy: Background and Considerations

Multiple crude oil export policy options might be considered that range from lifting current
export restrictions to maintaining export restrictions. Additionally, there are several other policy
options that might include exempting LTO from export restrictions, modifying the BIS crude oil
definition, or allowing crude oil exports for a limited period of time.

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U.S. Crude Oil Export Policy: Background and Considerations

Contents
Introduction ...................................................................................................................................... 1
Background ...................................................................................................................................... 3
Legal and Regulatory Context ......................................................................................................... 5
The Energy Policy and Conservation Act .................................................................................. 5
The Export Administration Act and the International Emergency Economic Powers
Act .......................................................................................................................................... 6
Other Relevant Federal Statutes ................................................................................................ 7
Section 201 of P.L. 104-58: Exports of Alaskan North Slope Oil ....................................... 7
MLA Limitation on Export of Crude Oil Transported via Federal Right-of-Way .............. 7
Limitation on Export of Oil from the Naval Petroleum Reserves ....................................... 8
Limitation on Export of Crude Oil Produced from the Outer Continental Shelf ................ 8
The Role of the Bureau of Industry and Security (BIS) ............................................................ 9
Crude Oil Export Motivations ......................................................................................................... 9
Tight Oil Production Has Increased ........................................................................................ 10
U.S. Refinery Configurations .................................................................................................. 13
Infrastructure Challenges ......................................................................................................... 15
Crude Oil Producer Prices ....................................................................................................... 17
Considerations for Congress .......................................................................................................... 18
Price Effects ............................................................................................................................. 18
Crude Oil Prices ................................................................................................................ 18
Product Prices .................................................................................................................... 20
Energy Security and Geopolitics ............................................................................................. 20
International Trade Policy ....................................................................................................... 23
Environment ............................................................................................................................ 23
Oil Transportation ............................................................................................................. 24
Oil Extraction .................................................................................................................... 25
Climate Change ................................................................................................................. 25
Policy Options ............................................................................................................................... 26
Lift Existing Restrictions ......................................................................................................... 26
Maintain Current Restrictions ................................................................................................. 27
Modify Restrictions ................................................................................................................. 28

Figures
Figure 1. U.S. Petroleum and Other Liquid Fuels Supply by Source .............................................. 2
Figure 2. U.S. Tight Oil Production, by Formation ....................................................................... 11
Figure 3. Oil Refining Capacity and Coking Refinery Capacity by PADD ................................... 14
Figure 4. PADD 3 Light, Sweet Crude Oil Imports from Nigeria ................................................. 15
Figure 5. Major U.S. and Canadian Crude Oil Pipelines ............................................................... 16
Figure B-1. Price History for Selected Crude Oil Types ............................................................... 31

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Tables
Table A-1. Approved Applications for U.S. Crude Oil Exports by Destination, FY2008-
FY2013 ....................................................................................................................................... 30

Appendixes
Appendix A. Crude Oil Export Applications Approved by BIS .................................................... 30
Appendix B. Crude Oil Price History ............................................................................................ 31

Contacts
Author Contact Information........................................................................................................... 32
Acknowledgments ......................................................................................................................... 32

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U.S. Crude Oil Export Policy: Background and Considerations

Introduction
As a result of advanced oil drilling and extraction technologies (primarily horizontal drilling and
hydraulic fracturing), crude oil production in the United States is growing and, according to
Energy Information Administration (EIA) reference case projections, may reach 9.6 million
barrels per day (bbl/d) by 2019—up from 5 million bbl/d in 2008 (see Figure 1).1 Production of
light tight oil (LTO) is, and is expected to be, the primary contributor to U.S. crude oil production
growth in the near to medium term. As U.S. LTO production has increased, some have called for
crude oil export restrictions to be either eased or lifted altogether.2 However, according to the
Energy Information Administration (EIA), U.S. crude oil demand is forecasted to be
approximately 15 million bbl/d through 2040.3 According to EIA’s reference case, crude oil
imports are projected to range between 6 million and 8 million bbl/d over the same period.4
Although, EIA’s high resource case projections, if realized, could result in lower import
requirements. This apparent disconnect between expected import needs and the desire to export
crude oil can be explained when considering the following: (1) the geographical location of LTO
production, (2) the type/quality (i.e., light, sweet) of crude oil being produced, (3) the types of
crude oil that some U.S. refineries are currently configured to optimally refine, (4) the petroleum
products that are derived from different types of crude oil, and (5) transportation and
infrastructure challenges associated with moving certain types of crude oil to demand centers.
Each of these aspects is discussed in more detail throughout this report.

1 Energy Information Administration, Annual Energy Outlook 2014 Early Release Overview, December 16, 2013.
2 See, e.g., Council on Foreign Relations, “Policy Innovation Memorandum No. 34: The Case for Allowing U.S. Crude
Oil Exports,” July 8, 2013.
3 Energy Information Administration, Annual Energy Outlook 2014 Early Release Overview, December 16, 2013.
4 Ibid.
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Figure 1. U.S. Petroleum and Other Liquid Fuels Supply by Source
1970-2040

Source: Energy Information Administration, Annual Energy Outlook 2014 Reference Case Early Release
Overview.
While U.S. crude oil exports are restricted under current law, petroleum products such as
naphtha5, gasoline, diesel fuel, and natural gas liquids are not subject to export restrictions. As a
result, production and export of these products have increased in recent years. In October 2013,
approximately 3.8 million barrels per day (bbl/d) of petroleum products were exported from the
United States—up from an average of nearly 1.4 million bbl/d in 2007.6
Members of Congress have taken various positions regarding crude oil exports, including (1)
calling for the Administration to lift export restrictions,7 (2) maintaining existing restrictions,8 and
(3) opposing attempts to lift restrictions through the World Trade Organization.9
The crude oil export policy debate has multiple dimensions and complexities. As U.S. LTO
production has increased—along with additional oil supply from Canada—certain challenges
have emerged that affect some oil producers and refiners. While the economic arguments both for
and against U.S. crude oil exports are quite complex and dynamic, there are some fundamental
concepts and issues that may be worth considering during debate about exporting U.S. crude oil.

5 Naphtha is a refined or partially refined light hydrocarbon that is blended or mixed with other hydrocarbons to make
motor gasoline or jet fuel. Naphtha can also be used as a solvent or petrochemical feedstock. For more information, see
EIA glossary at http://www.eia.gov/tools/glossary/, accessed March 12, 2014.
6 Energy Information Administration website, Petroleum & Other Liquids: Imports/Exports & Movements,
http://www.eia.gov/petroleum/data.cfm#imports, accessed January 28, 2014.
7 Senator Lisa Murkowski, “A Signal to the World: Renovating the Architecture of U.S. Energy Exports,” January 7,
2014.
8 Senator Robert Menendez, Letter to President Barack Obama, December 16, 2013.
9 Senator Edward Markey, Letter to Ambassador Michael Froman, U.S. Trade Representative, December 3, 2013.
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This report provides background and context about the crude oil legal and regulatory framework,
discusses motivations that underlie the desire to export U.S. crude oil, and presents analysis of
issues that Congress may choose to consider during debate about U.S. crude oil export policy.
Background
Current crude oil export restrictions date back to the 1970s, during an era of U.S. oil price
controls that motivated producers to export and sell crude oil at unregulated world prices.10 In
response, crude oil, petroleum products, and natural gas liquids were placed on the Commodity
Control List established by the Export Administration Act of 1969.11 In 1973, the Organization of
Arab Petroleum Exporting Countries (OAPEC) imposed a total embargo of crude oil delivered to
the United States.12 The oil embargo motivated Congress to enact laws that would limit U.S.
crude oil export opportunities.13 The embargo resulted in rapid and steep crude oil price increases,
thereby creating a perception of oil resource scarcity and prompting concerns about U.S. crude oil
import reliance.14 In response to these concerns Congress passed legislation—including the
Energy Policy and Conservation Act (EPCA)—to restrict U.S. crude oil exports, with some
exceptions as determined by the President. Using these exceptions, the United States has exported
crude oil for decades, although in relatively low volumes. Crude oil exports reached a level of
287,000 bbl/d in 1980.15 In 2013, crude oil exports from the United States averaged 120,000
bbl/d, almost all of which was sent to Canada.16
In the context of exports, the Bureau of Industry and Security (BIS)—the Department of
Commerce agency responsible for crude oil export licenses—defines “crude oil” as follows:
“Crude oil” is defined as a mixture of hydrocarbons that existed in liquid phase in
underground reservoirs and remains liquid at atmospheric pressure after passing through
surface separating facilities and which has not been processed through a crude oil distillation
tower. Included are reconstituted crude petroleum, and lease condensate and liquid
hydrocarbons produced from tar sands, gilsonite, and oil shale. Drip gases are also included,
but topped crude oil, residual oil, and other finished and unfinished oils are excluded.17
From 1970 to 2008, U.S. crude oil production was on a steady decline (see Figure 1). During this
time, there were periods when easing crude oil export restrictions was a national-level policy

10 Robert L. Bradley, Oil, Gas, and Government: The U.S. Experience, Cato Institute, 1996.
11 Ibid.
12 For additional information about events that led to the embargo, see Center for Strategic & International Studies,
“The Arab Oil Embargo—40 Years Later,” October 16, 2013.
13 Federal government crude oil export regulations date back to as early as 1917. However, laws that currently restrict
exports were enacted in the mid/late 1970’s. For additional background on U.S. oil export regulation history, see
Bradley, Robert L., Oil, Gas, and Government: The U.S. Experience, Cato Institute, 1996.
14 For additional background about the Arab oil embargo, see Center for Strategic & International Studies, “The Arab
Oil Embargo—40 Years Later,” October 16, 2013.
15 Energy Information Administration website, Petroleum & Other Liquids: Exports by Destination,
http://www.eia.gov, accessed March 19, 2014.
16 Ibid. Some non-U.S. crude oil was re-exported to China in 2013. Re-exports of non-commingled foreign crude oil are
allowed under current export restrictions.
17 U.S. Department of Commerce Bureau of Industry and Security, “Export Administration Regulations: Short Supply
Controls,” February 28, 2013.
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topic and presidential determinations were made to exempt crude oil exports that met certain
criteria. In 2009, production of light/sweet crude in tight oil formations throughout the country
started to increase rapidly, and production levels are expected to continue rising out to 2019, or
perhaps later.
The physical and chemical properties of LTO, when placed into context of the crude oil slate18
desired by U.S. refineries, is one important factor that underlies the crude oil export debate. For
more information about crude oil characteristics, see the text box below.
All Crude Oil Is Not Created Equal
Hundreds of different types of crude oil are produced global y, each of which has unique qualities and characteristics.
Two of the most common parameters used to compare different types of crude oil are (1) API gravity, and (2) sulfur
content. API gravity, expressed in degrees, indicates the density of crude oil. The higher the API gravity, the lighter
the crude oil. Sulfur content, expressed as a percentage, indicates the amount of sulfur contained in a particular crude
stream. High sulfur content crudes are referred to as “sour” and low sulfur content crudes are referred to as
“sweet.”19 Additional y, when processed by a refinery, different crude oils can yield varying amounts of petroleum
products such as gasoline, diesel fuel, jet fuel, and fuel oil. The following table compares five different types of crude
oil based on API, sulfur content, and initial product yield.



Initial Product Yield (%)
Crude Oil (Yr)
API˚
Sulfur (%)
Resid
Gas oil
Distillate
Naphtha
Other
Maya (’07)
20.5 (H)
3.65 (Sr)
36
14
21
18
1
Arabian Heavy (’01)
27.5 (H)
2.78 (Sr)
30
25
24
18
3
Eagle Ford Cond. (’11) 55.6 (XL)
0.01 (Swt)
1
15
31
48
5
Eagle Ford 40 (’12)
40.1 (L)
0.09 (Swt)
11
28
33
26
2
West Texas Sour (’01) 32.4 (M)
1.72 (Sr)
14
29
29
27
1
Source: API and Sulfur numbers from EIA; Product Yields from Chevron Assays.
Notes: Product yields represent typical initial yields off atmospheric and vacuum towers, which is generally the first step in the
refining process. Additional processing steps (i.e., cracking, coking, combining, etc.) are used to produce finished products such
as gasoline, diesel fuel, and others. Individual refineries are typically configured to handle a certain blend of crude oils that wil
produce an optimized volume of initial and finished products. H = Heavy; M = Medium; L = Light; XL = Extra Light; Sr = Sour;
Swt = Sweet; Cond. = condensate.
Definitions: (1) Resid represents residual fuel oil, which is a general classification for heavier oils that can be used as feedstock
for a coking refinery; (2) Gas oil refers to fuel oils that are lighter than resid but heavier than distil ate and can include certain
heating oils and fuels; (3) Distillate can be used as either a diesel fuel or a fuel oil; (4) Naphtha can be blended with other
materials to produce motor gasoline or jet fuel. Naphtha can also be used as a solvent or as a petrochemical feedstock; (5)
Other generally refers to light refinery gases such as butane and propane.
Oil refiners, which process a blend of different crude oils, general y look to optimize the type/quality of crude streams
to produce the desired product (i.e., gasoline and diesel fuel) output based on price (crude oil prices and product
values) and other market conditions. The technical configuration, product markets, and economic conditions for each
individual refinery will affect the desired crude oil selection.
Prior to the advent of advanced drilling and extraction technologies, many U.S. refiners in the
Midwest and Gulf Coast invested in equipment to process heavy crudes from Canada and Latin
America. Generally, these investments were encouraged by price discounts for heavy crudes.

18 Crude oil slate refers to the blend of different crude oils a refinery might process to yield a desired set of petroleum
products.
19 For more information, see Energy Information Administration, “Crude oils have different quality characteristics,”
Today In Energy, July 16, 2012.
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Tight oil production has changed the situation and the entire industry is adjusting. Investments are
being made to process more light crude. Transportation bottlenecks are being relieved. However,
as LTO volumes increase, oil producers are bracing for continuing price discounts that may result
from a structural oversupply of light crudes in certain regions. Whether the industry will be
economically motivated to continue adjusting to accommodate expected light crude production
and supply is uncertain.
Legal and Regulatory Context
The export of domestically produced crude oil has been significantly restricted since the 1970s by
an array of federal laws and regulations, in particular the Energy Policy and Conservation Act of
1975 (EPCA)20 and the resultant Short Supply Control Regulations adopted and administered by
the Bureau of Industry and Security (BIS). These laws and regulations are discussed below.
The Energy Policy and Conservation Act
EPCA directs the President to “promulgate a rule prohibiting the export of crude oil and natural
gas produced in the United States, except that the President may ... exempt from such prohibition
such crude oil or natural gas exports which he determines to be consistent with the national
interest and the purposes of this chapter.”21 The act further provides that the exemptions to the
prohibition should be “based on the purpose for export, class of seller or purchaser, country of
destination, or any other reasonable classification or basis as the President determines to be
appropriate and consistent with the national interest and the purposes of this chapter.”22
This general prohibition on crude oil exports and the exemptions to that prohibition mandated by
EPCA are found in the BIS regulations on Short Supply Controls at 15 C.F.R. §754.2. The
regulations provide that a license must be obtained for all exports of crude oil, including those to
Canada.23 There are enumerated exceptions to the license requirement for foreign origin crude oil
stored in the Strategic Petroleum Reserves,24 small samples exported for analytic and testing
purposes,25 and exports of oil transported by pipeline over rights-of-way granted pursuant to
Section 203 of the Trans-Alaska Pipeline Authorization Act.26
The regulations provide that BIS will issue licenses for certain crude oil exports that fall under
one of the listed exemptions, including (1) exports from Alaska’s Cook Inlet; (2) exports to
Canada for consumption or use therein; (3) exports in connection with refining or exchange of
Strategic Petroleum Reserve oil; (4) exports of heavy California crude oil up to an average
volume not to exceed 25,000 barrels per day; (5) exports that are consistent with certain
international agreements; (6) exports that are consistent with findings made by the President
under certain statutes (see section below titled “Other Relevant Federal Statutes”); and (7) exports

20 P.L. 94-163.
21 42 U.S.C. §6212(b)(1).
22 Ibid. at §6212(b)(2).
23 15 C.F.R. §754.2(a).
24 Ibid. at §754.2(h).
25 Ibid. at §754.2(i).
26 43 U.S.C. §1652; 15 C.F.R. §754.2(j).
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of foreign origin crude oil where, based on satisfactory written documentation, the exporter can
demonstrate that the oil is not of U.S. origin and has not been commingled with oil of U.S.
origin.27
The regulations also direct BIS to review applications to export crude oil that do not fall under
one of these exemptions on a “case by case basis” and to approve such applications on a finding
that the proposed export is “consistent with the national interest and the purposes of the Energy
Policy and Conservation Act.”28 However, the regulations suggest that only certain specific
exports will be authorized pursuant to this case-by-case review. The regulations provide that
while BIS “will consider all applications for approval,” generally BIS will only approve those
applications that are either for temporary exports (e.g., a pipeline that crosses an international
border before returning to the United States), or are for transactions (1) that result directly in
importation of an equal or greater quantity and quality of crude oil; (2) that take place under
contracts that can be terminated if petroleum supplies of the United States are threatened; and (3)
for which the applicant can demonstrate that for compelling economic or technological reasons,
the crude oil cannot reasonably be marketed in the United States29
The Export Administration Act and the International Emergency
Economic Powers Act

Although EPCA directs the President to promulgate regulations that restrict crude oil exports, it
does not provide the regulatory framework for enforcement of that restriction and the issuance of
licenses for eligible exports. As mentioned above, the BIS is tasked with that duty, which is
handled under its “short supply control” regulations. The source of this authority is somewhat
complicated. The Export Administration Act of 1979 (EAA)30 confers upon the President the
power to control exports for national security, foreign policy, or short-supply purposes, authorizes
the President to establish export licensing mechanisms for certain items, and provides guidance
and places certain limits on that authority.31 These restrictions are enforced by BIS. Crude oil
restrictions and licensing are found in the BIS short supply controls authorized by the EAA.
However, the EAA expired in August 2001. The provisions of the act, and the regulations issued
pursuant to it, remain in effect via yearly executive orders issued by the President under authority
granted to him by the International Emergency Economic Powers Act.32 That act authorizes the
President to “deal with any unusual and extraordinary threat, which has its source in whole or
substantial part outside the United States, to the national security, foreign policy, or economy of
the United States, if the President declares a national emergency with respect to such threat.”33

27 15 C.F.R. §754.2(b)(1). For example, Canadian crude oil transported to the U.S. Gulf Coast via the controversial
Keystone XL Pipeline, if it met the commingling requirement, would be eligible for export. For additional background
and analysis of the Keystone XL Pipeline, see CRS Report R41668, Keystone XL Pipeline Project: Key Issues, by Paul
W. Parfomak et al.
28 Ibid. at §754.2(b)(2).
29 Ibid.
30 P.L. 96-72.
31 For additional analysis of the EAA and federal export controls, see CRS Report R41916, The U.S. Export Control
System and the President’s Reform Initiative
, by Ian F. Fergusson and Paul K. Kerr.
32 P.L. 95-223.
33 50 U.S.C. §1701(a).
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When the EAA first expired in 2001, the President cited this emergency authority in the issuance
of Executive Order 13222, which provided for the continued execution of the EAA and the
regulations issued pursuant to it.34 This exercise of emergency authority has been repeated
annually by the President since that time, most recently in August 2013.35
Other Relevant Federal Statutes
In addition to the statutes described above, several other federal statutes either bar certain types of
crude oil exports or mandate that certain crude oil exports be exempt from the general prohibition
in EPCA.
Section 201 of P.L. 104-58: Exports of Alaskan North Slope Oil
Section 201 of P.L. 104-58 amended the Mineral Leasing Act (MLA),36 to authorize the export of
oil transported by pipeline over the right-of-way granted pursuant to the Trans-Alaska Pipeline
Authorization Act unless the President finds that export of this oil is not in the national interest.37
The President’s national interest determination must, at a minimum, consider (1) whether the
export will diminish the quantity or quality of petroleum available in the United States; (2) the
results of an environmental review; and (3) whether the export might cause sustained material oil
supply shortages or significantly increase oil prices above world market levels.38 The legislation
required submission of this national interest determination within five months of November 28,
1995.39
In April 1996, President Clinton issued a determination that such exports were in the national
interest.40 BIS administers authorizations of Trans-Alaska Pipeline System oil exports pursuant to
15 C.F.R. §754.2(j), which carves out an exception to the general crude oil export licensing
requirements provided that certain conditions regarding the physical transportation of the crude
oil are satisfied.
MLA Limitation on Export of Crude Oil Transported via Federal Right-of-Way
Section 28(u) of the MLA clarifies that all domestically produced crude oil (except oil exchanged
for similar quantities for purposes of convenience or efficiency) transported through federal lands
via rights-of-way granted pursuant to the MLA “shall be subject to all of the limitations and
licensing requirements of the Export Administration Act.”41 Section 28(u) also provides that
before such exports may occur, the President must “make and publish an express finding that
such exports will not diminish the total quantity or quality of petroleum available in the United

34 Executive Order 12322: Continuation of Export Control Regulations, 66 Fed. Reg 44025 (August 22, 2001).
35 Continuation of the National Emergency With Respect to Export Control Regulations, 78 Fed. Reg. 59107 (August
13, 2013).
36 30 U.S.C. §§181 et seq.
37 30 U.S.C. §185(s)(1).
38 Ibid.
39 Ibid.
40 Memoranda of President: Exports of Alaskan North Slope (ANS) Crude Oil, 61 Fed. Reg 19,507 (May 2, 1996).
41 30 U.S.C. §185(u).
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States, and are in the national interest and are in accord with the provisions of the Export
Administration Act.”42 The MLA further directs the President to submit reports to Congress
containing these findings, and provides that Congress “shall have a period of sixty days, thirty
days of which Congress must have been in session, to consider whether exports under the terms
of this section are in the national interest. If Congress ... passes a concurrent resolution of
disapproval stating disagreement with the President’s finding concerning the national interest,
further exports ... shall cease.”43 The MLA restriction on exports of crude oil that are transported
through federal lands via a right-of-way is incorporated into the BIS regulations at 15 C.F.R.
§754.2(c)(ii).
Limitation on Export of Oil from the Naval Petroleum Reserves
10 U.S.C. §7430(e) provides that petroleum produced at the naval petroleum reserves (except
petroleum exchanged for similar quantities for purposes of convenience or efficiency) “shall be
subject to all of the limitations and licensing requirements of the Export Administration Act.”
Section 7430(e) also provides that before such exports can take place, the President must “make
and publish an express finding that such exports will not diminish the total quantity or quality of
petroleum available in the United States, and are in the national interest and are in accord with the
provisions of the Export Administration Act.”44 The Section 7430(e) restriction on exports of
petroleum produced at the naval petroleum reserves is incorporated into the BIS regulations at 15
C.F.R. §754.2(c)(iv).
Limitation on Export of Crude Oil Produced from the Outer Continental Shelf
Section 28 of the Outer Continental Shelf Lands Act (OCSLA)45 provides that any oil or gas
produced from the Outer Continental Shelf (OCS)46 “shall be subject to all of the limitations and
licensing requirements of the Export Administration Act.” As with the statutory export limitations
discussed above, exports meeting this description are only authorized if the President makes “an
express finding that such exports will not increase reliance on imported oil or gas, are in the
national interest, and are in accord with the provisions of the Export Administration Act.”47 The
OCSLA requires the President to submit reports containing such findings to Congress and
provides that Congress “shall have a period of sixty calendar days, thirty days of which Congress
must have been in session, to consider whether exports under the terms of this section are in the
national interest. If the Congress ... passes a concurrent resolution of disapproval stating
disagreement with the President’s finding concerning the national interest, further exports ... shall
cease.”48 The OCSLA restriction on exports of petroleum produced from the OCS is incorporated
into the BIS regulations at 15 C.F.R. §754.2(c)(iii).

42 Ibid.
43 Ibid.
44 10 U.S.C. §7430(e).
45 43 U.S.C. §1354.
46 For information and analysis regarding the scope of oil and natural gas exploration and production on the Outer
Continental Shelf, see CRS Report RL33404, Offshore Oil and Gas Development: Legal Framework, by Adam Vann.
47 43 U.S.C. §1354(b).
48 Ibid. at §1354(c). Note that similar legislative veto provisions elsewhere in the U.S. Code were declared
unconstitutional in INS v. Chadha, 462 U.S. 919 (1983).
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The Role of the Bureau of Industry and Security (BIS)
As noted above, exports of crude oil are licensed under the short supply controls of the Export
Administration Act. The Export Administration Regulations (EAR) codify the requirements and
provisions of the various statutes, which are administered by the Bureau of Industry and Security.
Except in certain instances, a license is required for the export of crude oil from the United States.
License applications are examined by the Office of National Security and Technology Transfer
Controls at BIS. Only a U.S. exporter or entity may apply for a license. License applications are
made electronically, thus one must register on the BIS Simplified Network Application Process
Redesign (SNAP-R).49 Once registered, the applicant must list the exporter, consignee, the
volume of the export and its monetary value, a description of the product, its end-use, and a
certification of origin for the product.
All BIS license applications are handled according to Executive Order 12981. Within nine days,
BIS must contact the applicant if additional information is required; return without action if
additional information is required or if a license is not needed; or refer the application to another
agency. Once an application has been submitted, BIS has 30 days to make a decision. However,
unlike dual-use technology licenses, crude oil licenses are not referred to other agencies. Thus,
most crude oil licenses are handled within a 7-10 day period. A license is good for one year and is
non-transferable, unless it is part of the assets of a company being bought or sold.
Certain crude oil exports can be shipped with a license exception. A license exception is an
authorization to export or re-export, under certain conditions, items subject to the EAR that
normally would require a license. Basically, under a license exception, the exporter certifies that a
lawful transaction is taking place while maintaining proper documentation. The three license
exceptions available for crude oil exports are (1) shipments of foreign-origin crude stored in the
Strategic Petroleum Reserve; (2) shipments of samples for analytic or testing purposes; and (3)
Trans-Alaska pipeline shipments. In order to use the TAPS license exception, certain tanker
routing and environmental restrictions must be observed. Additionally, vessels used to export
TAPS crude oil must be U.S.-owned and crewed. In addition, the licenses allow no re-exports,
thus, prohibiting, for example, trans-shipments to foreign destinations through Canada.
The number of crude oil license applications has steadily increased over the last few years, from
31 applications in FY2008 to 103 in FY2013 (see Table A-1 in Appendix A for additional detail).
In the last several years, no licenses have been rejected, although some have been returned
without action. This high approval rate is likely due to the specificity and exporters’ knowledge of
the regulations. The vast majority of licenses are for exports to Canada. For countries other than
Canada, the exports can be attributed to re-exports of foreign crude oil that has not been
commingled with domestic crude.
Crude Oil Export Motivations
As tight oil production has rapidly increased, technical and economic factors are motivating some
stakeholders to pursue lifting crude oil export restrictions. Some oil producers would like to

49 For more information about SNAP-R, see https://www.bis.doc.gov/index.php/licensing/simplified-network-
application-process-redesign-snap-r.
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receive higher prices for oil produced. However, some refiners are concerned that regional crude
oil acquisition price discounts may narrow if exports are expanded. Narrow price discounts may
affect refinery operating margins and may result in some refineries ceasing operations.
Additionally, some refiners may need to consider capital investments necessary to absorb
increasing volumes of LTO—along with the value of products yielded from refining LTO. As
mentioned above, the geographic location of tight oil production, refinery configurations,
infrastructure limitations, and prices received by some oil producers have been cited as
justification for lifting export restrictions. However, it is important to realize that these factors are
not static in nature. Rather, they are dynamic and are constantly changing. Refineries can adjust
their operations. Transportation infrastructure can adjust based on market conditions. Therefore,
oil values received by oil producers would likely adjust as well. In 2013, the Energy Information
Administration stated:
Some recent commentary has suggested that it was likely or even inevitable that the growth
in U.S. oil production from tight resources would be significantly curtailed unless there was
a relaxation of current U.S. policies toward crude oil exports. However, this is likely an
overstatement of the actual situation, because there are several other midstream and
downstream adjustments that could help to accommodate changing production patterns.50
The dynamic nature of the oil industry makes the debate about oil export policy inherently
complex. Each of the three primary industry segments—production, transportation, and
refining—will adjust based on changes to any one of the other segments. As a result, it can be
difficult to assess the potential impacts of policy decisions on any one segment without
considering how the other two might adjust to changing market conditions. With that caveat,
additional detail about some of the motivations for crude oil exports is provided in the following
sections.
Tight Oil Production Has Increased
In 2000, approximately 250,000 bbl/d of tight oil was produced in the United States.51 In 2012,
U.S. tight oil production was 2.25 million bbl/day, a nearly 10-fold increase.52 The Energy
Information Administration (EIA) 2014 reference case projects that U.S. tight oil production will
continue to increase in the near to medium term and projects that LTO production may peak at 4.8
million bbl/day in 2019.53 Most of this production is expected to come from three tight oil
formations: (1) Eagle Ford in Texas, (2) Permian Basin in Texas, and (3) Bakken in North Dakota
(see Figure 2). It is important to note that EIA projections for LTO production are subject to
assumptions that are based on currently available information and current policies (e.g., export
restrictions). These projections would likely change over time as new information becomes
available and if policies are modified. Some degree of uncertainty exists in terms of how much
LTO might be produced. Future projections may be either higher or lower than those included in
EIA’s 2014 Annual Energy Outlook.

50 Energy Information Administration, “Absorbing Increases in U.S. Crude Oil Production,” This Week in Petroleum,
May 1, 2013.
51 EIA 2014 AEO.
52 Ibid.
53 Ibid.
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Timing for a potential oversupply, and resulting price discounts, of U.S. LTO is also uncertain and
depends on several factors. Some analysts estimate that price discounts related to the combination
of LTO production volumes and export restrictions may occur as early as 2015/2016 or sometime
after 2020.54 Some of the factors that will likely impact the timing and magnitude of price
discounts include (1) actual LTO production levels, (2) potential for U.S. exports to Canada, (3)
LTO access to West Coast markets, (4) potential to displace light sour and medium grade crudes
in refineries, and (5) the amount of additional LTO processing capacity at refineries.55
Figure 2. U.S. Tight Oil Production, by Formation
(2000-2040 Reference Case est.)

Source: Energy Information Administration, Annual Energy Outlook 2014 Early Release. High
Resource/Improved Technology Case preliminary projections were provided by EIA and are used with
permission.
Notes: The area chart shows EIA’s reference case projections for tight oil production by formation. The red
dashed line shows EIA’s high resource/improved technology case for total tight oil production out to 2040. The
disparity between these two projections illustrates some of the uncertainty associated with long-term tight oil
production in the United States. Locations for tight oil formations are as fol ows: Bakken, North Dakota; Eagle
Ford, Texas; Permian, Texas and New Mexico; Woodford, Oklahoma; Austin Chalk, Texas, Louisiana, and
Mississippi; Niobrara, Colorado and Wyoming; Monterey, California.
Based on EIA reference case projections in Figure 2, LTO production is projected to rapidly
increase and peak around 2019. The implication of the reference case production profile is that
the window of opportunity for crude oil exports—depending on export volumes—may be
temporary. The potential temporary nature of the export opportunity may reflect the continuous

54 Turner, Mason & Company, “U.S. Crude Export Restrictions: Industry Responses and Impacts,” February 28, 2014.
55 Ibid.
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and rapid drilling that may be needed to maintain and increase LTO volumes. Although, EIA’s
preliminary High Resource case indicates that LTO may continue growing out to 2040. As noted
above, actual and projected production can, and does, change over time. The High Resource case
reflects how industry knowledge could expand and technologies could improve, thereby resulting
in increased U.S. LTO production in the future. LTO production at scale is a relatively new
industry development and, thus, it is likely too early to accurately predict the magnitude of future
production levels.
One element of LTO production is the increase in extremely light hydrocarbons that might be
classified as lease condensate, which is subject to export restrictions. While there is no quality
characteristic (i.e., API gravity) that defines lease condensate, increasing production volumes of
condensate and condensate-like material is one aspect of the crude oil export debate. For
additional information, see the text box below.
Lease Condensate: What is it? Is it Crude Oil?
Production of lease condensate, especial y in the Eagle Ford formation in Texas, has emerged as a topic of debate in
the context of U.S. crude oil exports. As the name implies, condensate is generally a gas underground. When it is
produced along with oil and gas, it “condenses” into a liquid at atmospheric temperature and pressure. According to
one source, the majority of Eagle Ford condensate is being produced from natural gas wells, not crude oil wel s.56
While “lease condensate” is included in the BIS crude oil definition, there is a potential contradiction within the
definition. BIS defines crude oil as hydrocarbons that existed in liquid phase underground. However, condensate is
general y in a gas phase underground and condenses to a liquid at atmospheric conditions. This apparent
contradiction, along with other considerations, raises questions about the applicability of export restrictions to
condensate.
As a point of comparison, the Energy Information Administration defines condensate as follows:
Condensate (lease condensate): Light liquid hydrocarbons recovered from lease separators or field facilities
at associated and non-associated natural gas wells. Mostly pentanes [hydrocarbons with five carbon atoms] and
heavier hydrocarbons. Normal y enters the crude oil stream after production.57
There does not appear to be a standard quality characteristic—such as API gravity—used to classify what is and is not
lease condensate. Additionally, there is limited information available that quantifies actual and expected volumes of
condensate produced on an annual basis, because lease condensate is typical y classified as crude oil for reporting
purposes. As a result, it can be difficult to accurately assess condensate production volumes when considering policy
options that might allow this material to be exported. According to one estimate, lease condensate production in
2013 was approximately 1 million bbl/d and may reach 1.6 million bbl/d by 2018.58
Furthermore, the EIA definition of condensate is very similar to the definition of “natural gasoline,” which is defined as
being “equivalent to pentanes plus.”59 Natural gasoline is a product of gas processing facilities. Some market analysts
have indicated that depending on the season—winter or summer—identical hydrocarbons can be classified as either
natural gasoline, which can be exported without restriction, or condensate, which is subject to export restrictions.60
Additionally, the BIS crude oil definition states that crude oil hydrocarbons that have not passed through a distillation
tower are subject to export restrictions. In order to comply with the regulation, investments are being made to install
stand-alone condensate splitters—essentially a basic distillation tower—that separate the components (e.g., naphtha)
of condensate. The resulting condensate components are eligible for export to international markets. As a result of
the above considerations, some industry stakeholders have called for condensate to be removed from the BIS
definition.

56 Personal communication with RBN Energy, LLC, February 7, 2014.
57 Energy Information Administration online glossary, available at http://www.eia.gov/tools/glossary/.
58 RBN Energy, LLC, “Like a Box of Chocolates – The Condensate Dilemma,” January 2014.
59 Energy Information Administration glossary.
60 RBN Energy LLC, “North American Oil and Gas Infrastructure: Shale Changes Everything,” Presentation to the
Center for Strategic and International Studies, November 14, 2013.
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Actual and projected LTO production levels are affecting the refining and infrastructure segments
in a variety of ways, and vice versa. How these segments might adjust to changing market
conditions (i.e., increased LTO production) will depend on multiple economic variables and
investment considerations.
U.S. Refinery Configurations61
As of October 2013, there were 115 oil refineries in the United States with a total operable
capacity of 17.8 million barrels per day of crude oil throughput.62 Each refinery has its own
unique configuration that is generally designed to economically optimize the use of a certain
crude oil blend and the production of oil products that will maximize profit margins. In the
context of exporting crude oil, refineries located in the Petroleum Administration for Defense
District (PADD) 3 provide an illustration of some of the emerging complexities and economic
decisions that are being considered as LTO production increases in the Gulf Coast area, and as
Canadian and Midwest crudes are delivered to the region.63
There are 43 refineries located in PADD 3, with a total operable refining capacity of
approximately 9.1 million barrels per day, the largest concentration of refining capacity in the
country.64 Nearly half of the refineries in PADD 3 are equipped with coking units (Figure 3), a
refinery process that upgrades heavy residual material from a refinery’s distillation unit and
converts this material into higher-value products such as naphtha and distillate.65 Adding a coking
unit to a refinery is an expensive endeavor, with estimated costs in the $1 billion+ range.
Generally, the decision to add coking capacity to a refinery is based on an expectation that the
refinery will be able to purchase heavier crude oils that generally sell at a discount, and can yield
certain oil products that are highly valued in domestic and international markets. Approximately
60% of PADD 3 refiners are considered coking refineries (Figure 3). Investments in coking
capacity were made based on an expectation that price-discounted heavy crudes from Canada and
Latin America would be increasingly available.

61 For additional analysis of the U.S. refining industry, see CRS Report R41478, The U.S. Oil Refining Industry:
Background in Changing Markets and Fuel Policies
, by Anthony Andrews et al.
62 Energy Information Administration, Refinery Utilization, and Capacity, http://www.eia.gov/dnav/pet/
pet_pnp_unc_dcu_nus_m.htm, accessed January 29, 2014.
63 For additional information about U.S. PADDs, see Energy Information Administration, “PADD regions enable
regional analysis of petroleum product supply and movements,” February 7, 2012, available at http://www.eia.gov/
todayinenergy/detail.cfm?id=4890&src=email.
64 EIA, “Refining and Utilization Capacity.”
65 For additional information about the coking process, see Energy Information Administration, “Coking is a refinery
process that produces 19% of finished petroleum product exports,” January 28, 2013, available at http://www.eia.gov/
todayinenergy/detail.cfm?id=9731.
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Figure 3. Oil Refining Capacity and Coking Refinery Capacity by PADD

Source: Energy Information Administration, CRS.
Notes: Numbers may not sum due to rounding. PADD 2 tight oil production is for Bakken only. PADD 3 tight
oil production reflects actual and expected crude oil production in both the Eagle Ford and Permian Basin
formations. Tight oil production numbers are from EIA’s 2014 Annual Energy Outlook reference case scenario.
Increased production—both actual and forecasted—of LTO in PADD 3, primarily from the Eagle
Ford and Permian Basin tight oil formations, may cause some refiners in this region to assess
their optimal economic operating parameters. Each individual refiner will likely evaluate
economic conditions—crude oil prices and product values—to determine if processing additional
volumes of LTO is economically justified. While it may be challenging for PADD 3 refiners to
process increasing volumes of LTO based on a refinery’s current configuration, investments can
be made to handle additional volumes of LTO. However, LTO price discounts, product values and
volume commitments, investment requirements, and economic optimization for each individual
refinery will dictate the additional volume of LTO that is ultimately absorbed. Whether such
investments might actually be made is beyond the scope of this report.
In addition to making investments in refining equipment, reducing import volumes of light sweet
crude into PADD 3 is one possible avenue for absorbing more domestically produced LTO, but
some refiners may have already exhausted this option. Indications are that light sweet crude
imports are approaching extremely low levels and there may be limited opportunities to further
reduce light sweet imports—based on current refinery configurations—if U.S. LTO production
continues to increase as projected. As an example, PADD 3 light sweet imports from Nigeria were
at or near zero at the end of 2013 (Figure 4).
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Figure 4. PADD 3 Light, Sweet Crude Oil Imports from Nigeria
2008-2013

Source: CRS using data from the Energy Information Administration. See EIA website, Petroleum & Other Liquids:
Imports/Exports & Movements
, http://www.eia.gov/petroleum/data.cfm#imports, accessed January 28, 2014.
Additionally, some estimates project that total North American light crude oil imports may go to
zero by the end of 2014.66 Once total light crude imports are reduced to zero, refiners may begin
evaluating options to reduce medium- and heavy-quality crude imports. However, foreign oil
suppliers—notably Saudi Arabia and Venezuela—have ownership positions in some U.S. refinery
assets. These countries could choose to continue providing oil, in some cases at discounts
compared to available U.S. crudes, to their U.S. refineries in order to maintain presence in the
U.S. oil market. Should countries elect this option, there may be limits to reducing crude oil
imports. The ability of refiners to utilize more LTO is one consideration. However, transporting
crude oil from production fields to refiners is another issue that can impact LTO price discounts
and refining economics.
Infrastructure Challenges
One consideration for U.S. oil producers is the availability and cost of transportation
infrastructure to deliver crude oil to refineries. Delivery infrastructure, and the cost associated
with various transportation modes, can affect the value of oil that is produced in certain locations.
LTO production growth in certain parts of the country is resulting in some constraints associated
with moving crude oil to refiners.67

66 Raymond James Energy Group, “Still Bearish on Oil & Gas Prices But There is Light at the End of the Tunnel,”
February 12, 2014.
67 For additional background about U.S. oil transportation infrastructure, see Energy Policy Research Foundation,
Pipelines, Trains, and Trucks: Moving Rising North American Oil Production to Market, October, 21, 2013.
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Crude oil is transported via pipeline, rail, marine vessel, and truck. Pipelines are the primary
means of crude oil transportation in the United States. Generally, the U.S. crude oil pipeline
network was originally designed to move crude oil and petroleum products generally northward
from the Gulf Coast to Cushing, Oklahoma, and other destinations (See Figure 5). The
geographic distribution of LTO production—currently concentrated in North Dakota and Texas—
is constraining the existing U.S. pipeline delivery system, thereby creating market access
challenges for some oil producers.
Figure 5. Major U.S. and Canadian Crude Oil Pipelines

Source: CRS using data from Platts Quarter 4, 2013 dataset. Map created on February 6, 2014.
Notes: The figure above is a simplified illustration of the U.S. crude oil pipeline network. Many small and short
distance pipelines are not included.
To address these challenges, the crude oil transportation network is evolving: (1) some pipelines
are reversing oil flow direction,68 (2) new pipelines are being developed,69 (3) rail shipments are
increasing to deliver LTO from North Dakota to the east and west coasts, as well as the Gulf
Coast,70 and (4) LTO waterborne shipments are also increasing. Waterborne shipments must

68 One pipeline reversal example is the Seaway pipeline (between Cushing, OK and the Freeport, Texas area) reversal
and expansion project. For more information see, Oil Daily, “Seaway Expansion Now Slated for Late Second Quarter,”
January 31, 2014.
69 For example, Enbridge is in the process of developing the Sandpiper Project; a new pipeline that would transport
Bakken crude oil from North Dakota to Wisconsin. For more information, see http://www.enbridge.com/
SandpiperProject.
70 For additional analysis, see CRS Report R43390, U.S. Rail Transportation of Crude Oil: Background and Issues for
Congress
, by John Frittelli et al.
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comply with Jones Act requirements.71 Transportation costs and constraints contribute to different
oil values at various delivery points throughout the country. While infrastructure adjustments are
occurring, it is unclear how much LTO volume these adjustments will ultimately accommodate.
Depending on their location and the cost of transportation modes available, some oil producers
may argue that allowing crude oil to be exported would serve to equalize prices by alleviating
some of the infrastructure-related price discounts in the market. Infrastructure limitations and
resulting price discounts will impact the volumes of oil produced as well as refiner decisions to
utilize incremental LTO production.
Crude Oil Producer Prices
Ultimately, the objective of U.S. oil producers is to maximize the value, or selling price, of each
barrel of oil produced. U.S. oil producers throughout the country receive different prices, which
can be affected by oversupply in a certain region due to production levels, refinery demand,
and/or infrastructure limitations. Figure B-1 in Appendix B provides price history information
for selected crude oil types. Allowing crude oil to be freely exported may have the result, all other
things being equal, of reducing producer price discounts in some parts of the country, thereby
equalizing the value of LTO to match global crude prices, adjusted for quality and yield
characteristics and the cost of transportation. However, allowing crude oil prices to normalize
may negatively impact certain refiners that are currently profitable due, in part, to regional crude
oil price discounts.
For example, spot prices for Bakken LTO have experienced price discounts compared to the U.S.
West Texas Intermediate (WTI) benchmark. EIA reports that Bakken discounts have been as high
as $28 per barrel, but have since adjusted—a result of changes to the oil transportation network
(see “Infrastructure Challenges” section above)—to lower levels as logistic constraints have been
alleviated in the region.72 Eagle Ford LTO in Texas has not experienced significant price
discounts like those observed in the Bakken, likely due to its relatively closer proximity to
refining customers and fewer transportation challenges. Eagle Ford condensate prices are more
difficult to assess (see “Condensate” text box above). While official price information does not
include a condensate category, some refiners do post prices for various crude types, including
condensate. A February 2014 price bulletin shows an Eagle Ford condensate price discount of
$6.50 per barrel, compared to Eagle Ford crude oil.73 This discount suggests that condensate may
be a less desirable feedstock for certain refineries.
As LTO production increases, transportation bottlenecks and limited refinery demand for LTO
and condensate feedstock may put downward pressure on LTO producer prices. While refining
and transportation adjustments will likely occur, lower prices may result in less oil production,
depending on the severity of the price discount and the economics of specific oil production

71 The Jones Act requires that vessels transporting cargo between two U.S. points be built in the United States, as well
as crewed and at least 75% owned by U.S. citizens. For information about the growth in waterborne shipments, see
Platts Oilgram Price Report, “US Jones Act fleet strains to meet demand,” February 18, 2014.
72 Energy Information Administration, “Bakken crude oil price differential to WTI narrows over last 14 months,”
Today in Energy, March 19, 2013.
73 Flint Hills Resources (FHR) publishes price bulletins for various crude oil types. The $6.50 price difference
mentioned above was derived from the FHR February 21, 2014 price bulletin by subtracting the difference between
“Eagle Ford, crude oil less than 50 API” and “Eagle Ford Condensate, equal to or greater than 60 API.” FHR price
bulletins are available at, http://www.fhr.com/refining/bulletins.aspx.
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projects. Furthermore, the relationship between producer prices and refinery acquisition costs is
dynamic. As transportation networks and refinery configurations adjust to a changing crude oil
slate, prices should reflect bottlenecks and limitations that exist. Under constraint conditions, the
price discounts needed to motivate system modifications, in combination with price levels needed
to incentivize incremental oil production, are uncertain and can be difficult to estimate due to the
integrated and dynamic nature of production, transportation, and refining. Such estimates are
beyond the scope of this report.
Considerations for Congress
Debate about U.S. crude oil exports is complex, dynamic, multidimensional, and includes many
different stakeholder views. As a result, there are several issues that Congress may consider
during future debate about crude oil exports. The following sections discuss some of these
considerations.
Price Effects
According to the economic theory of international trade, opening markets to world trade tends to
push the domestic price of the traded good toward the world price. Additionally, if the volume of
products entering the world market is sufficiently large, the world price may also adjust to
account for the new world supplies. Although the U.S. oil market has been open to world trade for
many years, it has generally been in one direction. While large volumes of imported crude oil
have helped to provide for the consumption of petroleum products, exports of crude oil have
essentially been prohibited. The price of oil is determined on the world market, and any changes
in demand and/or supply which might be expected to affect the price of oil must be set against
world levels of market activity. As the United States considers whether to allow the export of
domestic crude oil to the world market, price changes are likely to occur consistent with those
suggested by international trade theory.
Crude Oil Prices
The price effects of allowing the export of crude oil from the United States to the world market
are likely to be threefold. First, the domestic price of LTO, or other grades of exported oil, is
likely to converge toward the world price. Second, the price of the U.S. reference crude grade—
West Texas Intermediate (WTI)—is likely to adjust relative to world reference grade crude oils,
notably Brent.74 Third, the world price of oil is likely to adjust to reflect added U.S. supplies to
the world total, all else being equal. See Figure B-1 in Appendix B for price history information
for selected crude oil types.
The actual magnitude of these price effects will be determined by the volume of crude exports
from the United States that actually materialize. For example, should U.S. exports of LTO settle
at about 500,000 barrels per day,75 this would represent nearly one half of the total output from

74 Brent crude oil is produced from the North Sea with similar qualities to WTI. It is generally used a benchmark for
world oil prices.
75 The export volume level of 500,000 bbl/d is used as an example only and was selected based on witness testimony
and analyst presentations that suggest an oversupply of 500,000 bbl/d of condensate and light sweet crude oil in the
(continued...)
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the Bakken field in 2013, 2.5% of total U.S. consumption, and 0.5% of world demand for oil.76
As a result, the observed price effects on Bakken, and other price-discounted domestic crude oils
might be expected to be relatively large, while the effects on U.S. reference prices and the world
price of oil might well be smaller.
Shale based LTO, since its entry to the U.S. market, has sold at a discounted price relative to other
domestic crude oils of similar quality. As described in this report, the location of the oil, the lack
of infrastructure to move the oil to refineries, and the technological characteristics of U.S.
refineries all contributed to the need of suppliers to discount the price to induce refiners to
purchase available supplies. The EIA reported that since 2012 the price of Bakken crude oil has
been discounted by as much as $28 per barrel compared to WTI.77 While price discounts were
less during most of the years 2012-2013, discounts were necessary to help cover the added cost of
rail shipment of Bakken crude oil, which averages $10 to $15 per barrel nationwide. Rail
shipment costs are as much as three times the cost of shipping oil by pipeline.78
Allowing the export of LTO would likely create additional demand for these crude oils that could
cause the price to rise from discounted levels in the U.S. market to approach those earned by
other light, sweet crudes in the world market. This would have the effect of reducing or
eliminating the discount experienced in the U.S. market. Transportation infrastructure limitations
would likely limit the quantities of exportable oil and add to its cost, but the potentially higher
price earned by producers could help expand the industry. Investment in the fields might increase
and with it oil production and related job creation.
Introduction of LTO exports might also affect the price spread between WTI and Brent crudes.
This could happen as the result of two price effects. First, as domestic LTO becomes relatively
less available on the domestic market, reflecting the quantities entering the world market, the
price of WTI is likely to rise as the domestic market tightens. Second, the price of Brent has been
especially high since the Libyan revolution, which led to reduced supplies of light, sweet crude
oil to Europe. While the direction of change in both prices may be estimated based on market
theory, the actual magnitude of the price change would likely depend on the quantity of U.S.
crude oil exported. A reduction in the WTI-Brent price spread as a result of these factors would be
favorable for oil production and producers in the United States, with somewhat higher product
prices for some U.S. consumers. A reduction in the price of Brent would primarily benefit
European consumers, although the benefits of lower prices could extend to the world market.
An increase in supply of LTO to the world market of, for example, 500,000 barrels per day, or
0.5% of world demand, would not be expected to have a large effect on world oil prices. A
qualification to this observation is that the elasticities of both demand and supply in the world
market are very low. As a result, changes in the quantities demanded or supplied on the market
can have exaggerated effects on price. Among the effects of U.S. exports might be a reduced call

(...continued)
2015 to 2016 timeframe. For more information see, Amy Myers Jaffe, Testimony to the Senate Energy and Natural
Resources Committee hearing titled “U.S. Crude Oil Exports: Opportunities and Challenges,” January 30, 2014. See
also, RBN Energy, LLC, Presentation to the Center for Strategic and International Studies titled “North American Oil
and Gas Infrastructure: Shale Changes Everything,” November 14, 2013.
76 Export volumes will be determined by market forces and decisions by firms producing crude oil.
77 Energy Information Administration, Today in Energy, March 19, 2013.
78 Energy Information Administration, Today in Energy, July 26, 2012.
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on Organization of the Petroleum Exporting Countries (OPEC) crude oil and an increase in
effective spare oil production capacity in the world market.
OPEC provides crude oil to fill the gap between world demand and the total production from all
other, non-OPEC, oil producers. Nations tend to use domestic crude oil and the supplies available
from close exporters before calling on OPEC producers for supply. If the call on OPEC producers
is reduced, this amounts to an increase in spare capacity in the sense that supplies, if withdrawn
from the market, could re-enter the market in the event of an unanticipated demand increase or a
supply emergency. An increase in spare capacity might be expected to reduce the potential for
price volatility in the oil market. The escalating prices of the summer of 2008 were associated
with a period of high demand that strained available supply, which caused excess capacity to fall
to low levels.
Product Prices
Changes in the prices of petroleum products directly affect consumer costs and behavior at the
pump. According to EIA, 68% of the consumer’s cost of gasoline and 57% of the consumer’s cost
of diesel fuel is directly attributable to the refiner’s cost of crude oil. Therefore, changes in the
price of crude oil are likely to result in proportional changes in the prices of petroleum products.
This implies that the crude oil price effects analyzed in the previous section of this report will
directly affect U.S. consumers.
The observed price discounts on Bakken crude largely, but not entirely, accrued to refiners
supplying the Midwest and Rocky Mountain regions. A result of the availability of discounted
crude oil may be that gasoline and other petroleum product prices were lower in those regions,
compared to the national average. For example, during the period January 2012 through January
2014 Midwest gasoline prices were lower than national average gasoline prices during 21 of 24
months. As the price of local crude oil supplies rises to reflect convergence with the world price
of oil, the benefit of these lower prices to regional consumers is likely to be reduced.
If world oil prices decline as a result of U.S. exports, this could result in somewhat lower
petroleum product prices for U.S. consumers as refiners use a mixture of domestic and imported
crude oils that are tied to the world price of oil. This could occur if the quantity weighted
reduction in world prices more than offset the quantity weighted increase in regional domestic
prices. Although a fall in world oil prices might be predicted, its magnitude may be small should
the amount of U.S. crude oil exports be small relative to the world market.
By contributing to an increase in world spare capacity, U.S. exports could contribute to less
volatile prices in the world oil market. Price stability, coming from less reaction to the numerous
supply problems that plague the supply side of the market, could reduce market uncertainty,
possibly bringing benefits to national and international energy planners.
Energy Security and Geopolitics
Although there has been some debate over U.S. crude oil exports, the effects of rising U.S. oil
production have already been felt in international markets and on geopolitics. While increased oil
production has allowed the United States to alter its geopolitical posture, the U.S. government has
not used its oil production as leverage over other countries, and has been critical of countries that
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U.S. Crude Oil Export Policy: Background and Considerations

do.79 Furthermore, the U.S. government does not directly control either oil production or the
companies that do produce oil.
The rise in U.S. production has decreased the need for imports, improving the U.S. trade balance,
and leaving more oil and spare production capacity on the world market. It has also contributed to
an increase in refined petroleum product exports, an activity not prohibited by U.S. law. The
change in perspective of the United States being a major oil importer to possibly an exporter has
altered the United States’ place in world energy. Countries that viewed the United States as a
declining economic power now view it as having competitive advantages in new sectors related to
petroleum. Some oil producing countries that viewed the United States as a market destination
may now view it as a competitor.
If the United States changes its import/export position and potentially its rules regarding crude
exports, the effects on geopolitics will differ depending upon how and when the changes occur in
addition to the expected volume of exports. In the short term, as has already been raised, the
United States may consider allowing more exports of crude oil to correct a possible market
inefficiency due to refining capacity and crude oil specifications. In the medium term, whether
U.S. laws will be changed to allow greater export of crude oil remains a key question. In the long
term, if U.S. laws and regulations were changed to promote crude oil exports, how big of an
exporter would the United States become remains the central question to the impact on
geopolitics.
The U.S. posture towards sanctions against Iran, including by some Members of Congress, has
become more stringent, in part because of the rise in U.S. oil production.80 Additionally, the
decline in U.S. imports has made the United States less reliant on certain OPEC countries,
primarily Nigeria (see Figure 4).81 OPEC, at least publicly, has “welcomed” the rise in U.S. oil
production as stabilizing to the market.82 Saudi Arabia, the world’s largest crude oil exporter, has
also indicated support for increased U.S. oil production as well as exports.83 However, some
analysts argue that the United States is shifting its interest (i.e., military presence) from key oil
producing regions, like the Middle East, because of its newfound resources.84 Additionally, other
industry analysts speculate that Saudi Arabia may discount its crude oil and refined product
exports to the United States in order to stay in the U.S. market for strategic reasons.

79 Prior to the 1973 Arab oil embargo, world oil markets were controlled by U.S. and European companies. U.S.
production played a swing role in matching supply and demand, and the Texas Railroad Commission dominated U.S.
production. Concern with “energy security” is related to the reaction in the United States to the “oil shocks” of the
1970s when Americans first realized that the cost, and even availability, of gasoline could be interrupted for political
reasons. Since the 1970s Presidents have sought, to one degree or another, to isolate the nation from the politics of
world oil markets, to little effect.
80 S. 965 was introduced in the first session of the 113th Congress calling for the expansion of U.S. oil production to
displace all of Iran’s exports on the world market.
81 Nigerian imports to the United States are mainly light, sweet crude, which the United States is producing more of.
82 Lananh Nguyen and Grant Smith, “OPEC Sees Shale as No Threat; Welcomes Output From Iran, Libya,” Bloomberg
News
, January 27, 2014, online.
83 Briefing by Saudi Arabia’s Minister of Petroleum and Mineral Resources, Ali bin Ibrahim Al-Naimi, to
congressional staff delegation, January 21, 2014.
84 John Kemp, “America’s energy revolution transforms international relations,” Reuters, January 28, 2014, pp.
http://in.reuters.com/article/2014/01/28/energy-diplomacy-idINL5N0L22YK20140128.
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U.S. consumption of petroleum products was 18.49 million barrels per day in 2012 compared to
the peak rate of 20.80 million barrels per day in 2005. In 2012, the United States produced 6.49
million barrels per day of crude oil and imported 8.53 million barrels per day with the difference
between consumption and production plus imports being made up of non-crude oil inputs (i.e.,
natural gas liquids, biofuels, refinery gain) to the refining system. In 2005, the United States
produced 5.18 million bbl/d and imported 10.13 million bbl/d. Over two-thirds of imports came
from Canada, Saudi Arabia, Mexico, and Venezuela in 2012 and almost 60% in 2005.85
Canada and Mexico are considered to be reliable suppliers. Saudi Arabia and Venezuela, both
OPEC members, own extensive refining assets in the United States (Motiva and Citgo refineries
respectively) and as a result might be expected to desire to maintain a presence in U.S. oil
markets. Beyond these 4 countries, over 30 other countries supply the United States with crude
oil, none at levels expected to be difficult to replace if emergency conditions might develop.
Should the United States remove barriers to crude oil exports, the amount of exports may not
matter as much as the psychological impact. The view that the United States is committed to the
global energy market may have the greatest effect. Even in the long run, most industry analysts
do not project that the United States will produce more crude oil than it consumes (see Figure 1).
Nevertheless, any additional barrels that the United States produces will dilute OPEC’s market
share, assuming demand stays the same, and this may be viewed positively by most oil
consuming countries.86
U.S. oil production is rising and is projected to rise, at least, through the beginning of the next
decade. If the EIA reference case projections turn out correctly, the United States would likely
resume its role as a growing importer of oil, assuming no other market changes. Changing
geopolitical relationships because of the current situation may prove short lived if oil production
does not continue to increase. Despite having a cartel supplier trying to manipulate prices, the oil
market remains robust and competitive.87 Being a part of this market has helped many countries,
both producers and consumers. As an example, when the United States needed petroleum
products after Hurricanes Katrina and Rita in 2005, European countries were able to supply them
from their strategic reserves. Similarly, when Japan shuttered its nuclear reactors after the
Fukushima tragedy in 2011, the energy market reacted by sending more natural gas, coal, and oil
resources to the country in order to satisfy energy demands. Unlike earlier periods, the United
States is now a participant in energy agreements through the International Energy Agency to share
the burden of supply disruptions on the world market. As part of its IEA membership, the United
States maintains a Strategic Petroleum Reserve which can offset disruptions in imported supplies.

85 EIA.
86 Testimony by Amy Myers Jaffe, Executive Director of Energy and Sustainability, Graduate School of Management,
Institute of Transportation Studies, University of California, Davis at the Senate Committee on Energy and Natural
Resources’ hearing, U.S. Crude Oil Exports: Opportunities and Challenges, January 30, 2014.
87 OPEC tries to manipulate oil prices by controlling its production, but only Saudi Arabia maintains significant spare
production capacity to adjust to immediate changes in market conditions, which is why it is referred to as the swing
producer for oil. When production from other countries is disrupted Saudi Arabia may increase its production to
maintain a target price, while it may cut production to make room for additional supplies from OPEC and non-OPEC
countries. However, Saudi Arabia has used its position for its own ends and contrary to OPEC’s goals, most notably
when it crashed prices in 1986.
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International Trade Policy
The potential exportation of U.S. crude oil may have implications for U.S. trade policy. The
United States has undertaken certain obligations as a member of the World Trade Organization
(WTO) and is a signatory to several regional and bilateral free trade agreements (FTAs).
As noted above, the United States licenses the export of crude oil under certain restrictive
circumstances. The WTO generally discourages limitations on international trade such as import
or export restraints. Underlying the WTO agreements are two basic principles: most-favored-
nation (MFN) treatment and national treatment. MFN obligates a WTO member not to
discriminate among the products of other member states. National treatment obligates a member
not to treat another member’s products as different from one’s own. The General Agreement on
Tariffs and Trade (GATT) Article XI, General Prohibition Against Quantitative Restraints, states:
No prohibition or restrictions other than duties, taxes or other charges made effective through
quotas, import or export licenses or other measures, shall be instituted or maintained by any
contracting party on the importation of any product of the territory of any other contracting
party or on the exportation or sale for export of any product destined for the territory of any
other contracting party.
However, some exceptions are available. Article XX provides a generalized exception that allows
governments to restrict trade based on the conservation of exhaustible natural resources or the
necessity to protect human health. However, these exceptions are subject to the provision that the
objectives are not used as a disguised restriction on international trade or to arbitrarily
discriminate between countries where the same conditions prevail. In this case, for example,
restricting the export of crude oil may be dependent on a member’s restriction of its own
production.
The crude oil restriction may also be subject to the WTO’s Agreement on Subsidies and
Countervailing Measures (ASCM) if it, by limiting demand, drives down the price, thereby
conferring a subsidy for domestic industry. This was one facet of a successful U.S. challenge to
Chinese raw materials and rare earth export restrictions.
The United States is in negotiations on two multi-nation free trade agreements (FTAs): the Trans-
Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). TPP
includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru,
Singapore, and Vietnam. TTIP is a proposed agreement between the United States and the
European Union. Countries in both of these negotiations may be interested in obtaining access to
U.S. energy supplies. Both these agreements are directly relevant to exports of U.S. liquefied
natural gas; according to statute it is in the national interest to approve LNG exports to FTA
countries. There is no such exception for exports of crude oil; however, the EU reportedly has
sought to put access to U.S. energy—including crude oil—on the agenda as a negotiating
objective.
Environment
Potential environmental issues that could arise from the removal of crude oil export restrictions
are dependent on the specific consequences that might ensue from removing such restrictions.
However, these consequences, particularly the long-term effects, are uncertain.
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A primary question for policy makers is the net effect on domestic oil production from removing
the export restriction. As illustrated in Figure 2, EIA projects domestic production of LTO to
increase dramatically in the near future. However, some observers have argued that the export
restriction, coupled with current refinery configurations (discussed above), will effectively create
a production ceiling for specific resources.88 Assuming this is the case, the next question concerns
magnitude: How much additional domestic production would occur if the crude oil export
restriction is removed? Estimates for expected U.S. crude oil export volumes are uncertain and
actual volumes will depend on multiple variables. As noted above in the “Price Effects” section,
some estimate a potential excess of 500,000 bbl/d of light sweet crude oil by the 2015 to 2016
timeframe.
Assuming that lifting or modifying export restrictions would result in a substantial increase in
domestic crude oil production—above what would otherwise occur—several environmental
issues would likely receive some attention. These issues, discussed below, may include oil
transportation, impacts related to oil extraction, and climate change.
Oil Transportation
A further increase in domestic crude oil production could amplify existing oil transportation
concerns, which have received considerable attention. In particular, the current expansion of
North American oil production has led to significant challenges in transporting crudes efficiently
and safely using the nation’s legacy pipeline infrastructure. In the face of continued uncertainty
about the prospects for additional pipeline capacity, and as a quicker, more flexible alternative to
new pipeline projects, crude oil producers are increasingly turning to rail as a means of
transporting crude supplies to U.S. markets. According to EIA data, the volume of crude oil
carried by rail increased by 423% between 2011 and 2012.89
While oil by rail has demonstrated benefits with respect to the efficient movement of oil from
producing regions to market hubs, it has also raised significant concerns about transportation
safety and potential impacts to the environment. The most recent data available indicate that
railroads consistently spill less crude oil per ton-mile transported than other modes of land
transportation.90 Nonetheless, safety and environmental concerns have been underscored by a
series of major accidents across North America involving crude oil transportation by rail.91
In addition, crude oil barge transportation may receive increased attention in light of the March
2014 oil spill in Galveston Bay, Texas.92 On March 22, 2014, a container ship collided with an oil

88 See Amy Myers Jaffe (Institute of Transportation Studies, University of California, Davis), Testimony before the
Senate Committee on Energy and Natural Resources, January 30, 2014; and Maria van der Hoeven (International
Energy Agency), “US must avoid shale boom turning to bust,” Financial Times, February 2013.
89 See EIA, Refinery Capacity Report, Table 9, June 2013. Note that this dataset indicates only the mode used for the
last leg of such shipments. Some shipments may involve multiple modes, such as rail to barge.
90 See CRS Report R43390, U.S. Rail Transportation of Crude Oil: Background and Issues for Congress, by John
Frittelli et al. See also, CRS Report R43401, Crude Oil Properties Relevant to Rail Transport Safety: In Brief, by
Anthony Andrews.
91 Ibid.
92 On March 22, 2014, a container ship collided with an oil barge, releasing approximately 168,000 gallons of oil,
closing the Port of Houston. For more information, see U.S. Coast Guard updates at http://www.uscgnews.com and the
National Oceanic and Atmospheric Administration website at http://response.restoration.noaa.gov/oil-and-chemical-
spills/oil-spills/kirby-barge-oil-spill-houstontexas-city-ship-channel-port-bolivar.
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barge, releasing approximately 168,000 gallons of oil into the bay and closing the Port of
Houston.
As with rail transport, crude oil transportation by barge has increased substantially in recent years
(by 53% between 2011 and 2012).93 However, the same dataset cited above indicates that tank
vessels and barges consistently spill less crude oil per ton-mile transported than other modes of
oil transportation.94 Nonetheless, spills from barges and tankers often occur in locations that may
be particularly vulnerable to oil contamination.
Oil Extraction
Based on the geology of LTO, hydraulic fracturing (“fracking”) is often required to extract the
resource. While the use of high-volume hydraulic fracturing has enabled the oil and gas industry
to markedly increase domestic production,95 questions have emerged regarding the potential
impacts this process may have on both air quality and groundwater quality—particularly on
private wells and drinking water supplies. The debate over the groundwater contamination risks
associated with hydraulic fracturing has been fueled in part by the lack of scientific studies to
assess the practice and related complaints.96 These issues could receive additional attention if
LTO extraction were to increase, due to a change in the U.S. crude oil export policy.
Climate Change
Some environmental groups want to keep the crude oil export restrictions in place for climate
change reasons.97 They argue that lifting the export restrictions would lead to increased crude oil
development, which could potentially alter the “global carbon budget.” The global carbon budget
is a scientifically estimated maximum amount of net worldwide greenhouse gases that could be
emitted without exceeding a proposed temperature target of 3.6°F above pre-industrial levels (a
2°C target). Some consider that such a temperature target could avoid the worst effects of
greenhouse-gas induced climate change, and it has been agreed as a political consideration in
international negotiations to address climate change under the United Nations Framework
Convention on Climate Change. Assuming this estimation is correct, all countries’ emissions (net
of any sequestration or “sinks”) would have to stay within the carbon budget to avoid exceeding
the 2°C temperature cap.
However, the degree to which a change in crude oil export policy would impact the carbon budget
is beyond the scope of this report. Moreover, there is no political agreement in the United States
on a domestic carbon budget, on the appropriateness of the global 2°C target, or on the validity of
any target.

93 See EIA, Refinery Capacity Report, Table 9, June 2013.
94 See CRS Report R43390, U.S. Rail Transportation of Crude Oil: Background and Issues for Congress, by John
Frittelli et al.
95 Hydraulic fracturing is used for oil and/or gas production in all 33 U.S. states where oil and natural gas production
takes place.
96 For further discussion, see CRS Report R41760, Hydraulic Fracturing and Safe Drinking Water Act Regulatory
Issues
, by Mary Tiemann and Adam Vann.
97 Oil Change International, Should It Stay or Should It Go? The Case Against U.S. Crude Oil Exports, October 2013;
and Paul Rauber, “Carbon States of America,” Sierra Club Magazine, November/December 2013.
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U.S. Crude Oil Export Policy: Background and Considerations

Policy Options
In light of the considerations discussed above, and as the debate about exporting crude oil
evolves, various proposals might emerge that fall within a spectrum of policy options that
Congress may choose to consider. At one end of the spectrum are calls to lift export restrictions
entirely. At the other end are calls to keep, maintain, and possibly expand current export
restrictions. Additionally, there are various proposals to ease crude oil export restrictions on a
limited basis. The following sections examine some policy options that have been proposed or
discussed.
Lift Existing Restrictions
One policy option that Congress may consider is to introduce legislation that amends EPCA.
Legislation that modifies EPCA, and other export-limiting statutes, may be the most
straightforward means of lifting crude oil export restrictions.98 However, some Members of
Congress have called on the executive branch to use its existing powers to either lift or ease
current export restrictions.99 For more information about executive branch powers related to crude
oil export restrictions, see the text box below titled “Could the Executive Branch Amend or
Eliminate Crude Oil Export Restrictions Absent Legislation?”
Should export restrictions be lifted entirely, U.S. oil producers would have access to global
markets, domestic and international prices would likely converge to some degree, and domestic
crude oil production may increase if the economics are justified. While this scenario might
potentially benefit crude oil producers, some U.S. refineries may be negatively affected as a result
of reducing regional crude oil price discounts. Additional crude oil production may also result in
environmental concerns associated with expanded extraction, transport, and consumption. While
unrestricted crude oil exports—all else being equal—may be expected to put downward pressure
on global crude prices and domestic gasoline prices, whether actual prices will be lower is
uncertain. Global crude oil prices are determined by a number of factors that are not controlled by
U.S. policy makers (e.g., supply disruptions, Saudi Arabia and OPEC decisions, and emerging
demand from Asia). Ultimately, effects from crude oil exports on prices, the environment, and
other considerations will be a function of the volume of crude oil that is produced and exported
and will be further affected by the actions of other players in the global oil industry.

98 EPCA is one law that restricts the export of crude oil. Other statutes include the Mineral Leasing Act, Outer
Continental Shelf Lands Act, and the Naval Petroleum Reserves Production Act.
99 U.S. Senator Lisa Murkowski, “A Signal to the World: Renovating the Architecture of U.S. Energy Exports,”
January 7, 2014.
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U.S. Crude Oil Export Policy: Background and Considerations

Could the Executive Branch Amend or Eliminate Crude Oil Export Restrictions
Absent Legislation?
Interest in reducing or eliminating existing restrictions on the export of crude oil has focused attention on the most
expeditious legislative and administrative tools to accomplish this end. The most determinative means by which to
accomplish this would arguably be the amendment or repeal of the current language in EPCA directing the President
to “promulgate a rule prohibiting the export of crude oil” absent a determination that the export be consistent with
the national interest and the purposes of EPCA.100 However, the executive branch may have some options available
to it even if Congress does not take this action.
First, BIS could amend the short supply control regulations restricting the export of crude oil. The statute mandates
only that exemptions to the general prohibition be granted if an export is “consistent with the national interest and
the purposes of [EPCA].”101 The restrictive language found at 15 C.F.R. §754.2(b)(2) could be amended to except
additional types of exports from the general prohibition so long as BIS finds the change to be in the national interest
and consistent with EPCA.102 In order to change the pertinent regulations, BIS would have to fol ow the rulemaking
procedures under the Administrative Procedure Act.103
Additional y, BIS could approve more applications to export crude oil pursuant to the “case by case” review
authorized by 15 C.F.R. §754.2(b)(2). Although the regulations do note that “general y” only certain kinds of narrowly
tailored exports will be authorized, the regulations also note that “BIS will consider all applications for approval,”
suggesting the possibility that exports that do not fit the criteria outlined in that section may nevertheless be licensed
by the agency. If BIS finds that an increase in the types of exports of crude oil is in the national interest and consistent
with EPCA, the agency is permitted to grant approval of those exports under the existing regulations that provide for
case-by-case review.
However, it appears that BIS could not repeal the regulations entirely. As with all agencies, BIS cannot take any action
beyond the scope of the statutory authority granted to it by Congress.104 Because EPCA states that the President,
through BIS, “shall ... promulgate a rule prohibiting the export of crude oil ... produced in the United States,”105 BIS
must have a rule in place that conforms with the statute—BIS would violate the statute if it simply repealed its
regulations that impose a general prohibition on the export of crude oil. If BIS decided to repeal the regulation, any
party aggrieved by the agency’s decision would be permitted to challenge the action in court.106
Final y, as discussed above, the crude oil export restrictions are administered by BIS pursuant to a statute (EAA) that
has expired, but continues to be effective due to annual executive orders renewing its provisions. The President could
reverse those directives via another executive order, or opt to not issue a new order when the current one expires.
However, this could create a number of practical problems, as it would nullify federal authority to conduct all export
control operations set forth in the EAA. Also, while allowing the effectiveness of the EAA provisions to lapse would
prevent administration of the BIS export license requirements, it would still leave in place the mandate of EPCA to
restrict crude oil exports, a mandate that the Administration would be required to address.
Maintain Current Restrictions
Congress could also do nothing, thereby maintaining the requirement for the President to limit
U.S. crude oil exports. According to supporters of this position, maintaining crude oil export

100 Repealing this language would not affect the restrictions on certain kinds of exports found in the MLA, OCSLA and
NPRPA.
101 42 U.S.C. §6212(b)(1).
102 In addition, any new rule or amendment to the existing rule would also have to be considered a reasonable
interpretation of the statutory language. See, e.g., Motor Veh. Mfrs. Ass'n v. State Farm Ins., 463 U.S. 29 (1983).
103 5 U.S.C. §§551 et seq.
104 See, e.g., Louisiana Public Service Comm’n v. FCC, 476 U.S. 355 (1986).
105 42 U.S.C. §6212(b)(1).
106 5 U.S.C. §§701, 702.
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U.S. Crude Oil Export Policy: Background and Considerations

restrictions is warranted since the United States is, and will be, reliant on imports, and crude oil
price discounts in the United States will be eliminated as domestic and global prices converge.107
Should existing export restrictions remain in place, there may be several potential outcomes to
consider. LTO production is expected to continue growing in the short/medium term and existing
refinery configurations may result in an oversupply of certain types of crude oil in specific
locations (e.g., Texas). While refineries can adjust their processes to accommodate changing
crude oil qualities, they will likely make the necessary capital investments to do so only if the
economics are warranted. Lower, or discounted, LTO prices would be an economic
consideration—along with the expected longevity of price discounts—for refiners when making
capital investment decisions. Lower/discounted oil prices may result in less LTO production from
certain fields. However, the price discount needed to motivate refiners to make capital
investments—and whether the price discount would be large enough to markedly reduce oil
production—is uncertain. Nevertheless, maintaining current export restrictions may result in
some oil producers receiving lower prices for oil produced. Lower prices may result in less U.S.
oil production, and therefore less economic development associated with oil production.
However, discounted crude oil prices in certain areas may also enable some refineries to operate
profitably, especially those in locations that benefit from price discounts.
Modify Restrictions
Between lifting oil export restrictions altogether and maintaining them in their current form are a
variety of policy options that might be considered. Some examples of such policies might include
the following:
Exempt LTO from export restrictions: The increase in LTO production appears
to be one of the underlying dynamics motivating exports. As a result, crude oil
with a certain quality characteristic or crude oil that is produced in specific
locations might be exempted from export restrictions. The President has some
powers to exempt certain crude oil exports if doing so is determined to be in the
national interest. Exempting exports of certain types of crude from specific
locations has occurred in the past. In 1992, then-President George H. W. Bush
issued an executive order allowing 25,000 bbl/d of California heavy crude to be
exported.
Remove “lease condensate” from the BIS crude oil definition: As discussed in
this report, lease condensate is an aspect of the crude oil export debate that is
receiving attention due to increased production of extra-light hydrocarbons.
Removing the term “lease condensate” from the crude oil definition may result in
some of that material being exported, thereby addressing some of the apparent
oversupply, and price discount, issues that may emerge in the Gulf of Mexico
region. However, crafting a definition for lease condensate may present some
challenges, as there is not an industry standard for this material.

107 During the 113th Congress, Senators Markey and Menendez sent multiple letters to the President and members of the
Administration arguing that crude oil export restrictions should remain in place and should not be modified. Content
and analysis contained in letters from Senators Markey and Mendez include (1) keeping U.S. crude oil in country and
maintaining price discounts, December 16, 2013, (2) opposing attempts to use the World Trade Organization as a
catalyst for changing U.S. export laws, December 3, 2013, and (3) Commerce Department authority limits and
underlying export laws, January 30, 2014.
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Allow crude oil exports for a limited period of time: EIA 2014 reference case
LTO projections indicate that production may reach an upper limit by 2019 and
then start to decline. While actual LTO production levels are uncertain, one
policy option may be to allow crude oil exports only for a defined period of
time—five years, for example—after which the domestic production and export
situation could be reassessed.
There are a number of other options for modifying existing restrictions that might be considered.
Each option could impact the market and individual stakeholders in different ways. Congress may
choose to study and analyze various considerations associated with efforts to modify crude export
restrictions.

Congressional Research Service
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Appendix A. Crude Oil Export Applications Approved by BIS
Table A-1. Approved Applications for U.S. Crude Oil Exports by Destination, FY2008-FY2013

Oct. 2007-Sept. 2008
Oct. 2008-Sept. 2009
Oct. 2009-Sept. 2010
Quantity*
Quantity*
Quantity*
Export
Applications
Value
(thousand
Applications
Value
(thousand
Applications
Value
(thousand
Destination
(approved)
($ millions)
barrels)
(approved)
($ millions)
barrels)
(approved)
($ millions)
barrels)
Barbados


1
720
12,582

Canada
29 50,181
466,048
30 31,185
544,946
39 38,339
497,032
China
1
a b






Italy
1 72
669 1 38
664

Total
31 50,253
466,717
32 31,943
558,192
39 38,339
497,032

Oct. 2010-Sept. 2011
Oct. 2011-Sept. 2012
Oct. 2012-Sept. 2013
Canada
39 39,650
427,978
62 93,646
979,313
91 163,676
1,712,809
China
1 5,000
53,969
1 5,000
52,288
2 10,000
104,646
Costa Rica
1 44
475

India
1 5,000
53,969
1 5,000
52,288



Italy

2
3,120
32,650
Mexico

2
1,440
15,069
Panama
1 136
1,468

3 5,460
57,137
Singapore
1 5,000
53,969
1 5,000
52,288
1 500 5,232
South Korea
1 5,000
53,969
1 5,000
52,288
2 936 9,795
Total
45 59,830
645,798
66
113,646
1,188,465 103 185,132
1,937,338
Source: Information provided by BIS to congressional staff.
Notes: (*) Data is reported by BIS in dollar value. Quantity was derived using EIA monthly spot prices averaged for each fiscal year.
a. $1,000
b. Approximately 10 barrels
CRS-30



Appendix B. Crude Oil Price History
Figure B-1. Price History for Selected Crude Oil Types
(February 2010 to February 2014)

Source: Platts
Notes: LLS = Louisiana Light Sweet. CRS recognizes that WTI and Bakken price differentials, as reported in the figure above, are different than
those referenced in the body of this report from EIA. Price information for Bakken in this figure reflects Clearbrook marketing point prices.
CRS-31

U.S. Crude Oil Export Policy: Background and Considerations


Author Contact Information

Phillip Brown
Ian F. Fergusson
Specialist in Energy Policy
Specialist in International Trade and Finance
pbrown@crs.loc.gov, 7-7386
ifergusson@crs.loc.gov, 7-4997
Robert Pirog
Michael Ratner
Specialist in Energy Economics
Specialist in Energy Policy
rpirog@crs.loc.gov, 7-6847
mratner@crs.loc.gov, 7-9529
Adam Vann
Jonathan L. Ramseur
Legislative Attorney
Specialist in Environmental Policy
avann@crs.loc.gov, 7-6978
jramseur@crs.loc.gov, 7-7919


Acknowledgments
Dan Shedd, CRS Legislative Attorney, is recognized for his contributions to the legal and regulatory
sections of this report. Amber Wilhelm in CRS’s Publishing and Editorial Resources Section contributed to
the report’s graphics.

Congressional Research Service
32