<div dir="ltr"><div>Vision2020 Post: Ted Moffett</div><div>---------------------------------------</div><div><a href="https://www.desmogblog.com/2017/10/11/experts-who-sold-idea-oil-exports-proven-very-wrong-very-fast?utm_source=dsb%20newsletter">https://www.desmogblog.com/2017/10/11/experts-who-sold-idea-oil-exports-proven-very-wrong-very-fast?utm_source=dsb%20newsletter</a></div><div><br></div><div><h1 class="gmail-page__title gmail-title" id="gmail-page-title">Experts Who Sold the Idea of Oil Exports Proven Very Wrong Very Fast</h1><article class="gmail-node-12196 gmail-node gmail-node-blog gmail-node-promoted gmail-view-mode-full gmail-clearfix"><header><p class="gmail-submitted gmail-mobile-only"><a href="https://www.desmogblog.com/user/justin-mikulka"><font color="#000080">Justin Mikulka</font></a> | October 11, 2017      </p><p class="gmail-submitted gmail-desktop-only"><br></p><p>As <a href="https://www.bloomberg.com/news/articles/2017-10-10/north-sea-oil-sandwiched-as-u-s-ships-crude-like-never-before" target="_blank"><font color="#000080">Bloomberg put it</font></a> recently, today “crude oil gushes out of the <span class="gmail-caps">U.S.</span> like never before.” <span class="gmail-caps">U.S.</span> exports of crude oil just hit a new record: nearly <a href="https://www.cnbc.com/2017/10/05/us-oil-exports-will-keep-booming-after-hitting-record-analysts-say.html" target="_blank"><font color="#000080">two million barrels </font></a>per day. And while at DeSmog we predicted that <a href="https://www.desmogblog.com/2015/08/10/lifting-oil-export-ban-would-enable-massive-fracking-expansion"><font color="#000080">“lifting the oil export ban will result in large increases in fracking for oil in the U.S.,”</font></a> most industry experts at the time were making very different claims.</p><p><span class="gmail-dquo">“</span>It’s universally agreed in the short term that we won’t see a flood of ships leaving for foreign ports because the economics aren’t right,” Sandy Fielden, director of energy analytics at respected consulting firm <a href="https://rbnenergy.com/u-s-firms-eager-to-test-the-water-after-lifting-of-oil-export-ban" target="_blank"><span class="gmail-caps"><font color="#000080">RBN</font></span><font color="#000080"> Energy</font></a>, said in December 2015, just before the ban on crude oil export lifted. Fielden was explaining why lifting that ban wouldn't result in a sizable and ongoing rush to export American crude.<br></p><p><a href="http://energypolicy.columbia.edu/" target="_blank"><font color="#000080">Columbia University’s Center on Global Energy Policy</font></a> (<span class="gmail-caps">CGEP</span>) <a href="https://www.desmogblog.com/2015/06/24/lifting-crude-oil-export-ban-daniel-yergin-and-anatomy-industry-public-relations-push"><font color="#000080">was instrumental</font></a> in pushing to lift this export ban. The <span class="gmail-caps">CGEP</span> report, “<a href="http://energypolicy.columbia.edu/sites/default/files/energy/Navigating%2520the%2520US%2520Oil%2520Export%2520Debate_January%25202015.pdf" target="_blank"><font color="#000080">Navigating the <span class="gmail-caps">U.S.</span></font><font color="#000080"> Crude Oil Export Debate</font></a>,” co-authored by the center’s leader Jason Bordoff, said, “we estimate lifting current crude export restrictions could increase <span class="gmail-caps">U.S.</span> crude production anywhere between 0 and 1.2 million barrels per day on average between now and 2025.”</p><p>Zero increase by 2025? Could they have really believed that?</p><p>The <span class="gmail-caps">U.S.</span> Energy Information Administration (<span class="gmail-caps">EIA</span>) had its most optimistic prediction for <span class="gmail-caps">U.S.</span> oil exports reaching two million barrels per day by 2050. They were only off by three-plus decades.</p><p><img style="width: 810px; height: 469px;" alt="" src="https://www.desmogblog.com/sites/beta.desmogblog.com/files/crude%20oil%20exports%20EIA.png"></p><p>Industry champion <span class="gmail-caps">IHS</span> predicted “<a href="https://www.ft.com/content/96df15aa-65b7-11e7-8526-7b38dcaef614?mhq5j=e5" target="_blank"><span class="gmail-caps"><font color="#000080">U.S.</font></span><font color="#000080"> crude oil exports reaching 1.4m b/d by 2020.</font></a>” And Forbes ran a piece titled, “<a href="http://fortune.com/2015/10/03/why-lifting-americas-ban-on-oil-exports-wont-matter/" target="_blank"><font color="#000080">Why lifting America’s ban on oil exports won’t matter</font></a>,” in which the author argued that it wasn’t economically feasible to export oil from the <span class="gmail-caps">U.S.</span></p><p>And yet, here we are in 2017: All of them proven wrong in short order. The <span class="gmail-caps">EIA</span>, for its part, is consistently criticized for its “<a href="http://thehill.com/blogs/pundits-blog/energy-environment/274869-an-energy-agencys-forecasting-flaws" target="_blank"><font color="#000080">forecasting flaws</font></a>” which have produced predictions that are “<a href="http://www.politico.com/agenda/story/2015/06/why-are-the-federal-governments-energy-forecasts-so-bad-000111" target="_blank"><font color="#000080">reliably and obviously wrong</font></a>.” Researchers have regularly acknowledged that <a href="https://www.researchgate.net/profile/Robert_Godby/publication/311847415_The_Role_of_Energy_Models_Characterizing_the_Uncertainty_of_the_Future_Electricity_System_to_Design_More_Efficient_and_Effective_Laws_and_Regulations/links/585d414708ae6eb8719ff4c2/The-Role-of-Energy-Models-Characterizing-the-Uncertainty-of-the-Future-Electricity-System-to-Design-More-Efficient-and-Effective-Laws-and-Regulations.pdf" target="_blank"><font color="#000080">predicting energy markets is really, really hard</font></a> and often goes “<a href="http://ensec.org/index.php?option=com_content&view=article&id=466:why-energy-forecasting-goes-wildly-wrong&catid=139:issue-content&Itemid=425" target="_blank"><font color="#000080">wildly wrong</font></a>.”</p><h3><strong>Wrong on Amounts, Wrong on Destination</strong></h3><p>In addition to being wrong about how quickly oil companies and commodities traders would begin exporting <span class="gmail-caps">U.S.</span> crude oil, energy experts also got wrong where that oil would go. <a href="https://www.desmogblog.com/2017/01/24/trump-harold-hamm-keystone-xl-dakota-access-approval-order"><font color="#000080">Harold Hamm, <span class="gmail-caps">CEO</span></font><font color="#000080"> of Continental Resources and major Trump donor</font></a>, <a href="https://www.youtube.com/watch?v=ND1Z6REDyC8" target="_blank"><font color="#000080">testified in Congress</font></a> that it was unlikely <span class="gmail-caps">U.S.</span> oil would be exported to China. And he was wrong. As <a href="https://www.bloomberg.com/news/articles/2017-10-10/north-sea-oil-sandwiched-as-u-s-ships-crude-like-never-before" target="_blank"><font color="#000080">Bloomberg notes</font></a>, “[m]uch of the <span class="gmail-caps">U.S.</span> outflow is going to Asia.”</p><p>To be fair, Hamm was one of the few people predicting explosive growth in the <span class="gmail-caps">U.S.</span> fracking industry should the export ban be lifted. He just was not right about where that oil would be going.</p><p>Yet it seems pretty obvious to anyone who could do math. American oil consumption has been flat and is not predicted to increase. Meanwhile, China’s consumption is growing rapidly at <a href="https://www.forbes.com/sites/rrapier/2017/09/18/chinas-oil-demand-is-growing-at-more-than-double-last-years-pace/%234c083f283ec0" target="_blank"><font color="#000080">twice the rate of just a year ago.</font></a></p><p>If you are in the business of selling oil, China is the biggest potential growth market. And now, without the export ban in the way, American shale reserves can be fracked <a href="https://www.desmogblog.com/2017/10/03/welfare-kings-half-current-oil-production-unprofitable-without-government-subsidies"><font color="#000080">using government subsidies</font></a> and commodities traders can sell oil to the highest bidder.</p><h3><strong>Commodities Traders Don’t Care About You</strong></h3><p>These days the justifications for lifting the ban look a lot more like myths — or an outright gift to the <span class="gmail-caps">U.S.</span> oil industry.</p><p>The first myth was that lifting the ban was in the name of <span class="gmail-caps">U.S.</span> national security. But this is <a href="https://www.desmogblog.com/2017/07/19/trump-ignorance-crude-oil-export-national-security-myth"><font color="#000080">easily debunked</font></a> because where oil goes is up to commodities traders. The largest traders like <a href="http://www.vitol.com/" target="_blank"><font color="#000080">Vitol</font></a> and <a href="https://www.trafigura.com/media/3370/trafigura-corporate-brochure-2017-en.pdf" target="_blank"><font color="#000080">Trafigura </font></a>are global companies with no interest in aligning with American security priorities.</p><p>The second myth was that the oil wouldn’t be going to China, just to strategic American allies. But that's not true either: <span class="gmail-caps">U.S.</span> crude oil is flowing to countries like China and Venezuela — the latter nation not exactly <a href="http://foreignpolicy.com/2017/08/25/trump-administration-slaps-economic-sanctions-on-venezuela/" target="_blank"><font color="#000080">a strategic ally</font></a> at this point. But traders need to trade, so the oil goes to the highest bidder.</p><p>The third myth was that the oil industry was motivated to lift the ban out of consideration for the average American, in order to “help consumers” by lowering prices at the pump.</p><p>However, that would require belief that commodities traders care about anything other than making money at any cost. Remember Enron? At least they were an American company.</p><p>But as we have heard on recordings of Enron traders, released by <span class="gmail-caps">CBS</span> News in 2004, that is not necessarily the case either. Do <a href="https://www.cbsnews.com/news/enron-traders-caught-on-tape/" target="_blank"><font color="#000080">these traders</font></a> sound like people whose priorities are the well-being of their fellow Americans?</p><blockquote><p>“He just f—s California,” says one Enron employee. “He steals money from California to the tune of about a million.”</p><p>“Will you rephrase that?” asks a second employee.</p><p>“<span class="gmail-caps">OK</span>, he, um, he arbitrages the California market to the tune of a million bucks or two a day,” replies the first.</p></blockquote><p>That was the case for Enron more than a decade ago. Is the industry that different today? Back then, we heard nothing about national security, the American consumer, or whether or not it makes sense to sell <span class="gmail-caps">U.S.</span> oil to a country like China. Is the energy industry having those conversations today?</p><p>In December of 2015 we posed the<a href="https://www.desmogblog.com/2015/12/15/top-three-myths-used-sell-lifting-crude-oil-export-ban-climate-and-security-disaster-making"><font color="#000080"> following question</font></a> on DeSmog:</p><blockquote><p>Will December 2015 be remembered by energy historians for the <a href="https://www.desmogblog.com/2015/12/12/historic-climate-agreement-should-spook-fossil-fuel-markets-and-escalate-clean-tech-investment"><font color="#000080">historic outcome of the <span class="gmail-caps">COP21</span></font><font color="#000080"> talks</font></a> in Paris, or will it be better known as the time in history when <span class="gmail-caps">U.S.</span> politicians once again caved to the oil industry and unleashed decades of fracking on the country and the climate?</p></blockquote><p>Current evidence would seem to support the latter, particularly as the <a href="https://www.desmogblog.com/2017/10/09/trump-administration-pruitt-repeal-clean-power-plan"><font color="#000080">Trump administration continues making moves</font></a> to lessen <span class="gmail-caps">U.S.</span> support for the Paris climate accord. And it looks like the “experts” are now agreeing with DeSmog.</p><p>The <a href="http://www.houstonchronicle.com/business/energy/article/Growth-of-Gulf-Coast-storage-enables-crude-oil-12256988.php" target="_blank"><font color="#000080">Houston Chronicle recently reported: </font></a>“The volume of <span class="gmail-caps">U.S.</span> crude exports should rise to 3 million a day by 2025, driven by Permian production and pipeline growth, said Kurt Barrow, vice president of oil markets for <span class="gmail-caps">IHS</span> Markit.” That is quite a bit higher than the <span class="gmail-caps">IHS</span> estimate (1.4 million barrels a day by 2020) before the ban was lifted.</p><p>That article also notes that “[t]he most bullish projections have the <span class="gmail-caps">U.S.</span> exporting more crude oil than it imports as soon as 2019.”  That means the <span class="gmail-caps">U.S.</span> would be exporting approximately five million barrels per day, less than two years from now.</p><p>But we know how accurate those kinds of predictions are.</p><p><span style="font-size:11px;font-style:italic">Main image: Oil industry Credit: <a href="https://www.flickr.com/photos/tomsaint/15103900971/in/photolist-p1FrxH-9NEtYQ-nuKGLj-71h5ks-J6PQii-r4A6yP-qQ6pz8-Sb4kGU-9qHz56-6N1FJT-4K6FCC-jP42ZK-ntxpNQ-UFKW1T-dGnx3X-doRb5-nfU1PZ-9M2DUT-83j2ag-dxLPdA-ndwuNj-9NJybd-rqmxvx-dVht75-nqh6cV-faZyRv-a7A37G-5byVjm-jP6maN-nNaXxz-XMmPJZ-nSSHXx-jP3Wh2-dadqHU-fSm5Ac-nHcYiC-na3fey-4PQcyS-KAdq6-fSnFQ3-9u3d97-cBc19m-dadqKy-oSTEKk-dadqLu-9u3dK7-31UGxM-6fvaAN-qsgmxx-o1K6fA" target="_blank"><font color="#000080">Rennett Stowe</font></a><a href="https://creativecommons.org/licenses/by/2.0/" target="_blank"><font color="#000080">, <span class="gmail-caps">CC</span></font><font color="#000080"> </font><span class="gmail-caps"><font color="#000080">BY</font></span><font color="#000080"> 2.0</font></a></span></p></header></article></div></div>