Russia is already worried about its economy. It didn’t help when it appeared the US was set to enter the natural gas market. Last month, I wrote Is US Set to Overtake Russia as World’s Biggest Supplier of Natural Gas?
If that wasn’t bad enough, Russian President Vladimir Putin may now be having nightmares about his economy. On Tuesday, a bill was introduced in the U.S. Senate that lifts the ban on American crude oil exports. If that were to happen, the US could gain more than $21 billion a year in export revenue. Guess where that crude or would go. Europe. That would definitely do major harm to the Russian economy without a single shot being fired over the situation in Ukraine.
If the Senate were to vote to lift that ban, it would take a BIG slice out of Russia’s export market. Currently Russia has a virtual stranglehold on much of Europe, according to the American Action Forum due to its status as major energy supplier.
To find the reason the United States has a ban on crude oil exports, you have to go all the way back to 1975. At that time there was an oil crisis created by OPEC. It seems the U.S. forgot to lift that ban and it remains the only country in the world that does not allow crude oil exports. Considering the amount of reserves the US has in North Dakota and elsewhere within our own borders we could export now.
The Forum observed, “If the crude oil export ban was lifted tomorrow, U.S. supplies headed to domestic refineries could be rerouted and placed on ships almost immediately to be exported overseas. This quick reaction would have immediate consequences for the Russian crude market.” Obviously Russia is currently the main supplier of crude oil products to Europe.
The largest European importer of Russian oil is Germany, taking in 690,000 barrels a day, going on 2012 figures. That same year, the Netherlands imported 550,000 barrels a day, Poland 480,000, and Belarus 415,000. These countries and all the others in Europe are almost completely dependent on Russia for their Energy needs.
If you didn’t know it before, now you know why Europe has remained mostly neutral during the ongoing Ukraine conflict, and the annexing of the Crimea.
In 2013, almost 70 percent of all Russian oil exports went to Europe. Besides Germany, the Netherlands, and Belarus, others dependent on Russian oil are Finland, Sweden, Lithuania, Italy, France, Spain, Bulgaria, Hungary, and even the U.K., even though they have wells in the North Sea. This information comes to us from the U.S. Energy Information Administration (EIA).
If the ban on oil exports was lifted, and there was an influx of U.S. oil into Europe, countries such as Poland, which depends almost entirely on Russian oil (96 percent), can reduce the influence of Russia in their economy. The US will never be able to provide 100 percent of Europe’s energy needs, but it could certainly be enough to loosen the stranglehold that Russia now has.
The American Action Forum estimates with the current price of oil at $58.17 up to $120, the US could supply between 500,000 and 1 million barrels of crude oil per day. That would bring in somewhere between $10.7 billion and $21 billion a year to the US economy. And for the US to gain that amount, Russia would lose it.
The US is still importing crude oil from Saudi Arabia, but in the last 12 months, those imports have decreased by 52%. Although Saudi Arabia will not be happy, the US economy is.
Saudi Arabia is the only loser in the medium crude oil market. The US was also importing oil from Kuwait, and those imports have decreased by 46 percent over the same period.
This is really quite amazing as the US has turned from an importer into the capability of becoming an exporter. The U.S. has the ability to make oil exports and fund new oil discoveries.
For America, lifting the oil export ban would enable us to earn billions for our economy, and also help our European allies. But possibly the best thing is that it would slow Vladimir Putin’s expansionism in Eastern Europe.
Three good things all in one package, but the greenies probably won’t think so.