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Tue, 2015-01-20 11:11Justin Mikulka
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Low Prices Driving Record U.S. Crude Oil Exports Despite Crude Oil Export Ban

Are you more desperate to get a better deal when you’re poor? I guess you are.”

That was John Auers, executive vice president of oil industry consulting firm Turner Mason & Company, describing the oil industry as being “poor” and “desperate” to Bloomberg.

As the oil industry cries poverty due to low oil prices in an effort to justify its attempts to lift all restrictions on exporting crude oil produced in the U.S., it is helpful to remember that this is an industry that was demanding tax breaks for oil production even when, in 2013, the top 5 companies made a combined $93 billion in profits. In just the second quarter of 2014 alone, a year of poverty and desperation, as the industry tells it, ExxonMobil made $8.8 billion in profit.

The “better deals” that John Auers was talking about are to be found on the global market, which technically isn’t open to those “poor” U.S. crude oil producers due to the crude oil export ban. Crude oil that is produced in the U.S. is worth more if it is sold on the world market than if it is sold in the United States.

So, it should come as no surprise that in November, as oil prices began falling, U.S. producers went about finding ways to export oil using some existing exemptions from the Reagan era as well as some new approaches. Their efforts resulted in the U.S. breaking the all-time monthly export record in November 2014. The previous record was set in 1957, a time when there was no export ban.

Thu, 2015-01-15 12:03Justin Mikulka
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Oil-by-Rail Reality: Watch What Industry Does, Not What They Say

In the past month, there have been numerous public relations efforts suggesting that much is being done to improve oil by rail safety. Unfortunately, it seems these efforts will not involve much more than press releases and hollow promises.”

Those words were first published on DeSmogBlog in March of last year in an article titled Why Nothing Will Happen On Oil by Rail Safety.

In that article, one particular public relations effort was highlighted:

“One of the more popular talking points in the recent PR effort was that BNSF, the railroad that is the largest transporter of oil by rail, had volunteered to buy 5,000 new rail tank cars that exceed any existing safety standard.”

This statement was referring to articles such as the one in the Wall Street Journal last February stating, “BNSF Railway said it plans to buy as many as 5,000 new tank cars to transport crude oil, an unusual move that marks the latest effort by the rail industry to improve safety after a spate of accidents.” Similar articles appeared in Reuters (“Exclusive: BNSF to move into tank car ownership with safer oil fleet”) and CNBC.

It was a clear message. The rail industry was not waiting on new regulations to improve safety and would take steps immediately to make the movement of oil by rail safer. Tough to argue with that, right?

Except it was nothing more than a public relations campaign.

Fri, 2015-01-09 04:00Justin Mikulka
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Obama Admin's Year-End Gift to the Oil Industry Quietly Allows Light Oil Exports

In a quiet move in the last days of 2014 that involved zero public debate, the Obama administration gave a big gift to the oil industry by allowing the export of light crude oil. This change by the administration stands to make the industry a few extra billion dollars per year by allowing them to sell crude oil on the international market where it gets a higher price than if it is sold to U.S. refineries.

So what bill was passed at the last minute of 2014 overturning the 40-year-old crude oil export ban and allowing companies to now export fracked crude oil? None.

As The Hill reported, sources “familiar with the matter” don’t even consider this a “change in policy” and thus no legislation is required. 

No policy change, no legislation needed. The only thing that has changed is that the oil industry can now export unlimited amounts of crude oil, much of it currently procured via hydraulic fracturing.

So how does an industry overturn longstanding legislation that was designed to protect the U.S. economy from fluctuations in the global oil market? First, there are the normal industry channels of lobbying and advertising over the past year to influence public opinion and get the politicians to do their bidding. But that process is expected to take significantly more time and money to result in officially ending the crude oil export ban.

So if you are the oil industry, you innovate. You call the oil you are producing condensate, get the regulators at the little known Bureau of Industry and Security to agree to not define what condensate actually is and then have them tell you that you as an industry are free to “self classify” your oil as condensate and export it.

Problem solved. Billions in profits made. Politicians provided with cover. And then you let sources “familiar with the matter” tell Reuters that this has been “carefully couched” as an “informal suggestion.” 

Thu, 2015-01-01 07:00Justin Mikulka
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Dangerous Oil Trains To Return to Lac-Megantic While Town Still Recovers

We’re seeing strong growth. We’re seeing some large accounts come back. The future is bright.”

According to the Portland Press Herald, that was the assessment of the future by Ryan Ratledge, the current chief operating officer for Central Maine and Quebec Railway, the railroad that runs through Lac-Megantic, Quebec.

Central Maine and Quebec Railway is the new name of the railroad that was operating the train that caused the oil train disaster in Lac Megantic in July 2013 that resulted in the death of 47 people. As DeSmogBlog reported previously, cost cutting measures by the railroad were directly linked to the cause of the accident. 

After the accident, the railway declared bankruptcy and the assets were purchased by Fortress Investment Group, which currently manages over $66 billion in assets.

Mon, 2014-12-15 06:00Justin Mikulka
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Calls to Ban Bomb Trains Ramp Up While Communities Await New Regulations

ban bomb trains

Earthjustice has challenged the Department of Transportation’s denial of a petition by Sierra Club and Forest Ethics to ban the transportation of Bakken crude oil in DOT-111 tank cars.

Most of the explosive crude oil on U.S. rails is moving in tanker cars that are almost guaranteed to fail in an accident,” explained Patti Goldman of Earthjustice.

The risks are too great to keep shipping explosive Bakken crude in defective DOT-111s. The National Transportation Safety Board called them unsafe two decades ago, and by the Department of Transportation’s own estimates, the U.S. could see 15 rail accidents every year involving these cars until we get them off the tracks.” 

At the same time Earthjustice was bringing this challenge, the Canadian government was announcing that it will ban 3,000 of the riskiest DOT-111s from carrying materials like Bakken crude.

Thu, 2014-12-11 07:00Justin Mikulka
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North Dakota's Meaningless New Bakken Oil Regulations Will Keep Bomb Trains Rolling

Oil train

New regulations purported to make Bakken crude safer for transport instead allow business as usual for the oil and rail industries moving explosive Bakken crude oil in unsafe DOT-111 rail cars.

The regulations announced Tuesday by the North Dakota Industrial Commission state that: “The goal is to produce crude oil that does not exceed a vapor pressure of 13.7 pounds per square inch (psi).”

There are two important things to note about this goal.

The first is that the vapor pressure of the oil that exploded in Lac-Megantic, Quebec, resulting in the death of 47 people, was under 10 psi and was described as being “as volatile as gasoline.” So the new regulations will permit oil that is significantly more volatile than the oil in the Lac-Megantic disaster to continue to be shipped by rail. 

The second important thing to note is that almost all of the oil that the industry and regulators have sampled in the past year has been well below 13.7 psi. Of 99 samples taken in the Pipeline and Hazardous Materials Safety Administration’s sampling study, 94 were below 13.7 psi and the average psi for that study was 12.3 psi.

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