WHEN the economics textbooks of the future are written, America’s ban on crude-oil exports will be a fine example of the perverse effects of protectionism. Similarly, a new decision by Barack Obama’s administration to allow American firms to sell some oil to Mexico will earn an honourable footnote in the story of the ban’s demise.
Geology, engineering, economics and politics are all at stake. In the fuel-hungry 1970s, America banned crude-oil exports in an effort to stabilise domestic prices. The country’s oil refineries are still configured to deal with the heavy, sour crude oil it used to import. Now, thanks to the shale revolution, American oil imports have plunged just as production has soared. Shale is another kind of crude, light and sweet. It is not ideal for America’s refineries, which must make costly tweaks to deal with it. But the ban means this oil can’t be exported, either.
That archaic rule now keeps the price of America’s domestically produced oil, signalled by the West Texas Intermediate (WTI) benchmark, at a hefty discount—currently over $5 per barrel—to the world price. That has become particularly painful since...Continue reading
Source :Business and finance http://ift.tt/1KmDIfO
0 commentaires:
Enregistrer un commentaire