"World Energy Outlook" Report and "Energy Outlook" on Potential US Crude Exports

World Energy Outlook 2013: The International Energy Agency released its annual World Energy Outlook report for 2013 back in December. Among some of its predictions for the world in 2035:

• By 2035, the US will be self sufficient in energy, China will be the world's largest importer of oil and India will be the largest importer of coal.
• Though the current gaps will narrow, large regional differences in natural gas prices will remain. This will drive differing levels of economic growth.
• The innovations of ultra-deep underwater drilling and of fracking to extract Light Tight Oil (LTO)   from shale has significantly increased the amount of oil that can be produced but demand is expected to grow more. IEA predicts a price (in 2012 dollars) of $128/barrel in 2035.
• Despite growth of non-OPEC oil production, oil production will remain centered in the Middle East, especially after the mid-2020s.
• Renewable energy sources will account for half the increase in power generation to 2035.
• Carbon emissions will continue to grow above international target levels.

So, while somethings are expected to change (the US becoming a net producer and China becoming the largest importer), somethings are not (the price of oil trending up and the Middle East dominating production).

BTW- If you haven't seen a graph of US oil production lately, you need to see this one provided by Mark Perry. The rise in US oil production since 2010 is startling and has reversed all the declines since 1988.

Energy Outlook on US Export Ban: With the US now the world's largest producer of oil and expected to eventually produce more crude than it uses, the question arises of whether the US should export crude oil.  This would not be much of a question (but rather one deserving a "D'uh!" response) if the US did not have a statutory ban on the export of US crude oil dating back to the days (hysteria) of the Arab Oil Embargo.

 Geoffrey Styles discusses the pros and cons of US crude oil exports on his Energy Outlook blog (not to be confused with the Energy Outlook Report). In Styles view, the argument is dominated by considerations of crude oil quality (Light Tight Oil that the US will be producing in abundance is not ideal for US refineries) and US domestic economic considerations (particularly producing the lowest possible domestic price for oil based fuel). 

As far as quality is concerned, the quality of LTO is actually too good for most US refineries which have complex machinery designed to refine lower quality oil (crude from Canada's tar sands comes to mind). LTO is much better suited to less complex refineries, such as those found in foreign countries. Therefore, producers could make $5-10 more per barrel selling it outside the US. Sending LTO overseas would encourage refineries to continue refining the lower quality crude (which appears to represent a US competitive advantage in the industry) and exporting petroleum products (which even today represent on of the US' top 10 exports).

Styles doesn't seem enthused about the con arguments which center on hopes of lowering the domestic price of oil based fuels and notions of energy security. Both arguments are undercut by the global nature of oil and petroleum products. Indeed, it seems likely that, even if export restrictions on crude oil exports lead to lower crude oil prices in the US, the export of gasoline, diesel, and heating oil would prevent a decrease in consumer fuels prices. In such a case, the crude export ban would simply lower the profits of LTO producers, and increase profits of refiners while at the same time producing less value added in the US economy than if there was no ban.