Just as bills have begun to move through both the House of Representatives and the Senate that would lift the longstanding ban on the export of U.S. crude oil, news outlets reported last week that the Commerce Department is “acting favorably on a number of applications” that would permit Petróleos Mexicanos, the state-owned oil company in Mexico, to swap around 100,000 barrels per day of exported Mexican crude oil for imported U.S. crude oil. If the swap proceeds, it would mark the first time that U.S. crude oil would make its way into a market outside the U.S. and Canada since export restrictions were introduced in the 1970’s.
Opinion in the U.S. is somewhat divided on the matter. Some have decried any attempt to permit additional exports of U.S. crude oil as a major policy blunder that will increase fuel prices in the U.S., threaten the nation's energy balance and security, and damage the environment through additional drilling activity. On the other hand, the Commerce Department’s action has been hailed by many as a sensible interpretation of existing policy and as perhaps the first step in a broader loosening of a 1970’s-era policy that no longer serves the needs of a much-changed U.S. energy industry.
No matter one’s opinion, the actions of the administration towards approving the crude oil exchange with Petróleos Mexicanos (which, it should be noted, would fall within a permitted category of export already entrenched within the existing crude oil export controls), and the increasing momentum in Congress towards easing or even lifting the crude oil export restrictions, represent major changes to U.S. energy policy. These changes will have both domestic and global implications, and deserve a thorough analysis.
Over the coming weeks, Hogan Lovells lawyers from around the world will analyze the impacts that increased crude oil exports from the U.S. would have in the U.S. and abroad.
First, our experienced legislative and policy team in Washington, D.C. will dive more deeply into the administrative and legislative developments and their drivers. Then, we will examine the impact that the Commerce Department’s actions will have in Mexico as well as the effect that increased U.S. crude oil exports overseas might have on global markets and on the financial hubs around the world that facilitate crude oil trading. Finally, our U.S. team will examine the impacts that additional markets for U.S. crude oil would have on U.S. producers and on infrastructure in the U.S. as well as the process and timing associated with taking advantage of these new markets.