Oil, oil everywhere, but not a drop to sell. Until now, that is. After a 40 year embargo, American politicians look set to relax the ban on exporting crude from the US.
The global market is hardly in need of any more oil – Brent Crude is still down at around $37 after falling off a cliff over the last 18 months. But that’s precisely why America’s producers are in need of a lifeline. Their output has soared in the past couple of years after decades of decline, partly thanks to the rise of shale oil. But fracking is an expensive process that has run into trouble thanks to the price slump.
Relaxing the ban has been a long-time aim of the Republicans but has been opposed by the White House in the past. It seems the Democrats have been persuaded to compromise in return for increases in funding for renewable energy projects. That contrasts with recent changes in energy policy back in Blighty, where the government has just slashed funding for solar power by 65%.
Getting access to international markets might seem like a no-brainer for Texas’s oil barons but not everyone is sold on the idea. There are concerns that the cost of fuel within the US could rise sharply if and when global prices start to grow again. The CRUDE Coalition, a lobby group that represents some of the country’s oil refiners, argues that the export ban is important for the country’s energy security.
The changing nature of the US oil market begs the question of how fracking could affect the UK’s energy industry. Britain’s total oil output has been in decline for some years and the country has been slower to adopt fracking amid fears about its impact on the environment and rural lifestyles.
Though Britain exports a lot of oil ‘products’, it has been net importer of crude since 2005 and of petroleum since 2013, but fracking could change all that. The Government sought to hasten its rise in August, announcing plans to force local councils to approve oil and gas planning applications more quickly.
Environmental concerns aside, the short-term economic argument is pretty compelling. An EY report (funded by the oil and gas industry, admittedly, claimed fracking could create 64,000 new jobs and attract £33bn of investment by 2032. But Britain’s long-term energy security depends on much more than shale, which is ultimately just as finite as other fossil fuels.