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US Crude Oil Can Save the Ukraine from Russian Aggression


US crude oil could save the Ukraine from Russian aggression. But it’s currently illegal.

Many advocates for Ukrainian freedom have called for US exports of natural gas to Europe to eliminate European dependence on Russia. The irony is that while exporting US natural gas to Europe is essentially legal, it’s not an immediate solution because the cost and engineering challenge of liquefying the natural gas for shipment require substantial investment that does not actually produce exportable gas for a number of years.

U.S. crude oil, however, is available for export now, but legally can’t be sold abroad.

How did That Happen?

The United States Congress voted to prohibit the export of crude oil in the 1970’s. This ill-conceived restraint on the global energy free market did not increase the amount of oil in the United States by one molecule, but it did discourage free market forces from taking the financial and engineering risks necessary to produce more energy. Only the dedicated persistence by visionaries like George Mitchell ultimately yielded the unconventional revolution that is driving US economic growth today.

Reduced dependence on imported oil means the United States is enjoying greater geopolitical independence than any time since the OPEC oil embargo in 1973. Current robust and increasing domestic oil and gas production not only fuels US economic growth, it has also led to the lowest US trade deficit in 14 years. The United States is rapidly growing exports of the world’s cleanest gasoline and diesel fuel to many parts of the world, such as Latin America and Asia, that lack adequate refining capacity to meet their urgent and growing need for fuel.

The current historical quirk in US trade law restricting crude exports means that one important tool is missing from the free world’s arsenal of sanction tools against Russia: exporting crude oil to European Union (EU) refineries.

It’s Time to Lift the Restriction on US Crude Oil Exports

Russia has certainly not hesitated to use its energy export policies for political manipulation. Restrictions on exports of natural gas, for example, have been used to leave Western Europeans freezing in the dark.

The EU currently imports over 1 million barrels a day of Urals oil from Russia. The Urals brand is a mixture of different Russian crude oils blended to work best in EU refineries. A blend of US crudes currently stored as surplus along the US Gulf Coast could be rapidly shipped to the EU to replace the Russian source without reducing the ample supply available to US refineries or increasing the price of US gasoline.

A joint EU/US sanction against Russian cutting off exports of Russian crude to Western Europe would have an immediate adverse effect on the Russian economy. The Russian government brought in over $400 billion from oil sales in 2013. Cutting off Western European sales would immediately reduce hard currency revenue at a time when Russia could least afford it.

Your Turn

What do you think? Has the time come to open the choke on US crude oil exports? What other policy changes are necessary to reduce the impact of Putin’s recent aggression? Leave a comment below.

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Tom Morgan

Tom Morgan is an Analyst for Drillinginfo. He has 20 years of experience practicing law with a focus on advocating for public policy to advance energy security and private property rights. Tom received his law degrees from Georgetown University and American University law schools. He hosts the weekly Drillinginfo Energy Minute, and you can find and connect with him on LinkedIn as Tom Morgan.