HEAVY IRON NEWS
40 Year Ban Lifted From US Oil Exportation
- By Design Team
- •
- 19 Jan, 2016
After a 40 year trading embargo has finally been lifted, Corpus Christi, Texas has shipped out its first international crude oil export to Vitol, an international trading company. The Arab Oil Embargo in the 1970s led to oil and gas rationing and a sharp decline of the domestic economy. Now in an oil surplus, American oil and gas companies have found themselves poised to resume widespread international exports.
THE OIL INDUSTRY CONTINUES TO GROW IN THE US
The domestic oil industry has continued to grow and develop in the wake of falling per barrel prices. This has led to a surplus of oil beyond what is necessary for local supply, making it once again safe to begin distributing internationally. It is hoping that the domestic oil industry will eventually be able to compete with Saudi Arabia and Russia on a global scale. Ideally the oil and gas companies will now be able to grow to maintain international supply rather than being limited solely to the domestic market. This offers a great deal of opportunity for expansion.
A MARKET IN CONTINUED RECOVERY
Though the outlook is positive, the oil and gas market still needs work if it is to fully rebound. Experts are optimistic about the industry's ability to recover, based primarily on the refusal of domestic oil producers to simply shut down. Instead, domestic oil and gas companies have worked hard to innovate and develop new technologies. Nevertheless, there are certain issues that could cause problems for the oil and gas industry, such as increased regulation and government blockades. International trading is a step in the right direction, but more cooperation with the government will be essential for future growth.
THE ARAB TRADE EMBARGO
In 1973, OPEC initiated trade restrictions on their oil exports, increasing oil prices from $3 to $12 per unit. Domestic oil production had slowed significantly prior to this, as there had been significant surplus provided internationally. In the wake of the Arab embargo, which had a disastrous impact on the American economy, restrictions were placed on domestic exports. Recently, the opposite issue has occurred. Rather than restricting oil supply, OPEC has flooded the market. This has led to a vastly reduced oil price intended to drive domestic production out of the market. Instead, domestic companies are taking action to improve their oil production efficiency and to hopefully become a world exporting power.
Presently, with the surplus of international and domestic oil and gas supply, domestic companies have found it difficult to maintain per barrel oil prices. The new freedom regarding international oil and gas exports will undoubtedly pave the way for better profits and flexibility for domestic oil and gas companies. Hopefully with new market freedom, the oil and gas prices will find it easier to rebound, and the industry will be able to begin growing once again. For more information about oil and gas, follow and contact Heavy Iron Oilfield Services, LLP.
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