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BP Finds Way To Bypass US Crude Export Ban
Hugh Pickens DOT Com writes "Bloomberg reports that the oil industry is pressuring President Barack Obama to end the 41-year-old ban on most crude exports but British Petroleum (BP) isn't waiting for a decision. The British oil giant has signed on to take at least 80 percent of the capacity of a new $360 million mini-refinery in Houston that will process crude just enough to escape restrictions on sales outside the country. 'It's a relatively inexpensive way around the export prohibition,' says Judith Dwarkin 'You can lightly ruffle the hydrocarbons and they are considered processed and then they aren't subject to the ban.' Amid a flood of new US oil, the demand for simple, one-step plants capable of transforming raw crude into exportable products such as propane is feeding a construction boom along the Gulf Coast. The first such mini-refinery, built for 1/10 the cost of a complex, full-scale refinery, is scheduled to open the first phase of its 100,000 barrel-a-day crude processing plant in July, The mini-refineries take advantage of the law that allows products refined from oil to be sold overseas, though not the raw crude itself. 'The international buyers of these products will likely need to refine them further, so this is basically a veiled form of condensate exports,' says Leo Mariani."
But ... the CO2!
No sig today...
You tell them no, they find a way around it.
crude oil, lightly shaken, and exported to the world.
revenues, lightly tossed, and exported to Bermuda.
Both cases just avoiding the law through legal means. In other words, the law's an ass.
I'm not one who understands the trading and registration of companies but I thought the majority shareholder was JPMorgan?
...don't you have a concept about an "agreement" and the "spirit of an agreement", and how violating one means also violating the other?
I'm not surprised that companies find loopholes in the legislation. But I am surprised that they are allowed to exploit these loopholes on the scale of building complex structures designed specifically to circumvent the letter of the law.
"I'm not building an atomic bomb, I'm just incidentally making stuff that a toddler with a screwdriver could happen to possibly assemble into an atomic bomb."
Why have a law like that in place at all. If the US government wanted the crude, they could buy it. Why stop someone from selling what they've legally worked for?
BP hasn't been very British in quite a while, a better name might be "Standard Oil" given how many of the component companies it is made up of came from that particular operation. It gets called British whenever it's politically expedient.
The number of slashdotters that bleat about "teh evil corporations that break teh law!"
But support bypassing copyright law and getting their content for free because "information must be free".
It's the same thing people.
Frankly I'm not sure what the point of the oil export ban is for... My gas is near its all time high here so all this theoretical excess oil isn't helping the price any.
BP haven't been known as British Petroleum for many years. It seems to be a tag most used (now) by the US. [I wonder if there have been any recent events that might cause the folks in the US to think that US folks weren't involved? Better to point the finger elsewhere.]
The world runs on oil.
Fuzzy bunnies and magic unicorn dreams don't change that. All the hot air from politicians won't change that.
Every last drop of oil is going to be burned, damn the consequences - it's too profitable. Developing viable real alternatives for energy transfer and storage will require a focused engineering effort on the scale of the Manhattan project deployed in conjunction with mass adoption of nuclear energy.
Utilities desperate to find alternatives are building LNG generation plants. This is stupid.
I bet the retirement fund on every drop of oil being burned. So far I've been right. We'll see if I end up eating cat food - but I don't think that's likely...
Comment removed based on user account deletion
They'd be bypassing the ban if they were exporting crude, but they are not exporting crude, so they are not bypassing the ban.
They're exporting refined petroleum product, which is perfectly legal.
Nothing to see here. Move along.
Politicians and regulators still have yet to realize that people will do what they see fit, despite laws, regulations, and penalties. On the personal side, if you're trying to regulate people harming themselves, they are willing to spray paint in a bag and destroy their brains by inhaling it to "get high"...what law can you make that will affect such a naked desire to harm one's self? Outside of the brain damage, this seems to be the same sort of thing, on a much larger scale. The market always exists, and always will exist, because it's nothing but a measure of how much people value certain things and outcomes and what sort of price they're willing to pay to get them. BP spending some money to export crude this way just shows that they're willing to go a little higher over these regulations.
And here I thought American companies are the most slimy, we are continually reminded that BP trumps them all
The goal of a corporation is to maximize profit at whatever cost to anyone else.
Tim Cook might not agree with you. The goal of a corporation is whatever its owners decide the goal should be.
What is so bad about this? The U.S. has some stupid protectionist law and BP finds a way around it.
I did some reading to find the basis of the 1975 law, administered by my "favorite" federal agency, the Bureau of Land Management (Jack Abramoff's digs). Apparently it was originally passed during the OPEC embargo when the USA was concerned about domestic shortages. Then it becomes like ethanol or agricultural subsidies, it stays because it reduces competition. Probably a violation of the WTO as well, same as when USA, EU and Japan challenged China's rare earth metal export bans... which China tried to express as an "environmental law"... which is the only current argument I can find for the crude export ban (CO emissions).
So is it a case of corporations skirting a government law, or a government skirting an international fair trade treaty?
Gently reply
Its a nice concept, in theory. But in practice it probably creates (or at least enhances) the same one of the problems we already have in our "justice" system here in the US. It creates overly broad laws that can be interpreted any number of ways. That wouldn't be a problem in a system with respectable prosecutors & judges, but we don't have that in any way shape or form. If you want evidence of just how bad things have you don't have to go far. Look at the Aaron Swartz case, a college student crushed for "stealing" electronic copies of publicly funded research papers. Do a search on "civil forfeiture" and you'll find hundreds of cases where prosecutors weren't able to prove any illegal activity, but were still able to seize peoples homes, cars & life savings.
"The goal of a democratic government is to maximize the population's well being."
That is not at all the goal of a democratic government. The only reason a democratic government exists is to exercise the will of the people, and to protect their rights from harm.
Government is not responsible for "well being."
Ahh the rule makers always love to complain about how people follow their rules.
Another way to say the same thing is that the export restrictions created a market for lightly processed oil products. If there is demand there is demand, it doesn't go away because you will it to. If that demand can be met in some way that fits in the rules and is still profitable, people WILL do it.
Trying to call that getting around a restriction is like the magic player complaining that someone insisted on playing stuff at the end of your turn after you said you were done. Duh read the rules, it isn't getting around anything...its what they say! Its following them.
"I opened my eyes, and everything went dark again"
If we can only export refined oil, it means we have to refine it on US soil. This is a dirty business, producing loads of crap you don't want in your environment. This ban forces us to destroy our own environment, while exporting the goodies that come out of it. This doesn't seem long-term smart.
int main(void) {while(1) fork(); return 0;}
"What's so bad about this?"
Perhaps the fact that it's oil drilled in the US and subsidized by the American taxpayer? and now it will go elsewhere in the world, subsidized by the American taxpayer.
The more you tighten your grip, the more will slip through your fingers.
I want to delete my account but Slashdot doesn't allow it.
I would say Tim Cook is doing an excellent job of maximizing profit.
He may be doing a lot of other, more noble things as well, but its all causing his company to maximize its profit.
Is he noble, or just good at what he does and picking 'the right way' to give people what they want?
Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
I think that the United States has a vested political interest in controlling the sale of oil. Which is not to suggest that you are wrong per se, but I think that the US oil policies are better understood in the context of hegemony than fair trade. However, the oil industry has been putting all of their propaganda efforts towards lifting this ban; I mark a half-dozen articles in Forbes alone within the last two years. As long as they can keep away from any concerns about national security, they might get their wish.
Those who advocate genocide deserve every protection afforded by law, and none afforded by common human decency.
I expect that the stockholders will agree with him as long as the stock increases in value and/or provides dividends better than the competition. As soon as what he wants starts costing them serious money, he's gone.
"I do not agree with what you say, but I will defend to the death your right to say it"
>>...new $360 million mini-refinery...demand for simple, one-step plants capable of transforming raw crude into exportable products such as propane is feeding a construction boom along the Gulf Coast.
Call me cynical, but it seems that most legislation aims to protect the existing jobs of stalwart political supporters in sponsors' districts. (e.g., Obama's first term "stimulus," which was mostly used to shore up the existing salaries and pensions of his political base.) Perhaps the intent of this bill was to continue a Gulf Coast construction boom, leading to more voter, er, labor-intensive refinery jobs?
Regardless of the ecological effects of our chemical energy dependency and the grey-area nature of this workaround, I applaud the move in general.
The world has given too much power to oil- and gas-funded dictatorships. Right now, the West is hesitating about sanctions against Russia (which are required for peaceful settlement of the crisis in Ukraine) because they depend too heavily on the Russian resource exports.
The proper way is of course to lift the restrictions, but that is a heavy, lengthy political process, and this clever workaround provides a quick solution that we need urgently today.
We can gradually move to renewable energy later. It makes more sense to use the oil for other things anyway.
It always amused me that some people thought more domestic drilling would return us to the days of cheap fuel. They seemed to think that the oil companies would ignore that they could get a higher price overseas and sell to us cheap out of the goodness of their hearts.
I am surprised that the US refiners aren't rioting in the streets over this. Taking their work and sending it overseas is a bad thing.
Oh, wait. All the big refineries are owned by big oil companies. Nevermind.
Good thing we have strong anti-trust laws to prevent massive vertical integration from preventing these sorts of abuses.
End our dependence on foreign oil!
Drill here and use it here to offset imports!
Another retarded right-wing meme also slaughtered by this: obama is destroying oil production because he hates america!
if the us govt wants to keep the oil within the borders, it's very simple. Just pay above the market price and stockpile the shit out of it.
BTW, the whole world subsidizes your asses by using dollars and eating your inflation whenever you do any kind of QE.
The goal of a democratic government is to maximize the population's well being."
That is not at all the goal of a democratic government.
A lot of people mistakenly think that "insure domestic tranquility" and "promote the general welfare" mean "try to make everyone happy" and "give the people what the want", when they really mean is "maintain order so things runs smoothly" and "provide a system of laws that allows people to pursue their interests without undue interference from the government". Note that the Surpreme Court ruled that "the Preamble indicates the general purpose for which the people ordained and established the Constitution" and went on to point out that "[the Preamble] has never been regarded as the source of any substantive power conferred on the Government...", in Jacobson v. Mass
Best possible answer:
Let them finish their mini-refinery. Let them ramp up production. Let them sign hundreds of contracts obliging them to deliver on partially-refined product.
Then, and only then, really fuck 'em by ban the export of insufficiently-refined product.
I have gotten so sick of companies dodging the intent of the law lately. I by no stretch of the imagination count as a hardcore law-and-order authoritarian, but it doesn't take Mother Jones to point out that we simply can't allow situations like this, or the whole Apple/IBM/Google/etc paying no US tax, and so on, to continue. If a company wants to play on our field, they need to follow our rules as intended.
"Well whatd'ya know, the rules of golf don't explicitly ban using a tunnel-boring machine to dig a straight shot to the cup! You sure got us, have fun turning Augusta into a strip-mine."
That's why we have the judicial system. Get back to us when Obama or any other president refuses to abide by the court's ruling on a question of law.
SURPRISE!
Come on. This isn't news, this is business as usual. News would be the people of the country stepping up and doing something about this kind of crap. Take the reins or stop complaining.
Fedora is doing the same thing: skirting the law.
The theory was that an unjust law could be ignored. In this case, export laws to certain countries was being skirted by simply not asking where the code came from, wink wink, nod nod.
Perhaps BP thinks the law is "unjust" and thus has a right to ignore the law?
Why can Fedora do this and people applaud it and BP is a villain?
Seems to me sauce for the goose is sauce for the gander, and allowing people or corporations to selective ignore laws means there is no rule of law, it is rule by mob.
Never answer an anonymous letter. - Yogi Berra
The world has given too much power to oil- and gas-funded dictatorships.
It is not a coincidence that some of the world's most odious governments are major petroleum producers. Oil revenues can buy off opponents, and allow otherwise disastrous economic policies to continue. Putin and the Saudi Monarchy would both be long gone without money from oil exports to keep them afloat. Venezuela's economy appears to finally be collapsing, despite their oil exports, but that should have happened long ago. The worst cases are countries like Nigeria, that are basically run as kleptocracies, with most of the oil revenue flowing into overseas bank accounts.
The world would be a far better place if more oil was produced in, and exported by, liberal democracies.
IMHO, too much focus has been done on the US on the Middle East. In reality, what needs to be the focus is Eastern Europe and the Pacific Rim. A Middle East in turmoil is a norm. A pissing contest between Japan, China, Russia, Singapore, the Koreas, and other nations in the area will be no less than World War 3 with its effects felt worldwide.
Oil is a nice thing to have, but keeping China and Japan from going to war with each other is far more important because that conflict would fundamentally affect the US and Europe's economies.
I'm curious, how much time in court is spent debating wether something was "clearly done" for a specific purpose?
perhaps its the fact that its 50% owned by American corporations who will do anything in pursuit of a $
Moreover, unlike creative works, or even manufactured items or services, there is a fixed quantity of petroleum available.
How is that? Songwriters have been found liable of accidental "plagiarism" (copyright infringement without attribution) over having copied an eight-note phrase. Now each note has a length and a pitch, other than the last note in a phrase. The last note in a phrase has no duration because there is no following note, and a phrase can be transposed to end on any note. There are about two distinct lengths (short and long), and seven distinct notes within any scale (do, re, mi, fa, so, la, ti). This gives 14 possibilities for all notes but the last, or 14^7 = 105 million possible eight note phrases. How is this not "a fixed quantity"?
Than the bad thing is (perhaps) that the U.S. taxpayer subsidises drilling this oil. But do you have any data to backup that claim? It seems a bit implausible.
Sometimes "maintain[ing] order so things run[s] smoothly" includes a social safety net so that people who have fallen on hard times don't turn to crime just to eat, as depicted in the novel Les Miserables and the film Aladdin, or turn to crime to obtain medical treatment, as depicted in the film John Q.
Venezuela's economy appears to finally be collapsing, despite their oil exports, but that should have happened long ago.
That's because Venezuela's oil exports have been dropping. When the oil industry was nationalized, Chavez installed a bunch of his yes men to run it. Knowing something about the petroleum industry was secondary to being a pro-Chavez stooge. Also, since it was nationalized, the "good enough for government work" mentality takes over and productivity goes down.
there is a lot of anger towards e.g. pedophiles who get round the ban on underage sex by waiting until they are old enough
The trouble is that different constituents have different rules as to what defines "old enough". Some people would apply the rule popularized by F. Hugh Herbert's play The Moon Is Blue of the age difference plus fourteen years, or equivalently half the older partner's age plus seven years. Under this rule, 19 and 17 is OK but 23 and 18 isn't. Others would claim that no age is old enough outside a state-recognized marriage or other domestic partnership.
"It is not a coincidence that some of the world's most odious governments are major petroleum producers. "
The USA is currently no. 3 in terms of oil production at about 10% of the world's total. North Korea is 110th, according to Wikipedia. Just sayin'.
The world would be a far better place if more oil was produced in, and exported by, liberal democracies.
They would probably get less liberal and less democratic as time went on.
See, for a minor example, Margeret Thatcher.
I would choose Margaret Thatcher over Putin any day.
Also, exporting oil seems to work fine for Norway and Canada without turning them into aggressive dictatorships. I agree that oil money corrupts, but when there is a developed society in place, it's not too bad.
This is the exact reason for the Keystone XL pipeline terminating at Houston. It was never for supplying the US domestic market; it is solely for the export of crude (or meta-crude) on the more lucrative international market, resulting in not one penny lower gas prices for consumers.
This is why it's so hard to have respect for the extremist Right supporters: slavishly voting against their own interests in the childish fantasy that by letting billionaires become trillionaires, they themselves - by some inexplicable miracle - will become millionaires instead of the real downward spiral into poverty.
Sure and our government policy makers will just sit back and not do anything to stop this workaround.................
Jack of all trades,master of none
Rasing the price of a commodity frequently reduces demand. Its not rocket science.
The Canadian governing Conservative party is currently about to pass the "Fair Elections Act" which is going to disenfranchise many voters, stop Elections Canada from even advertising elections including telling people where they vote, stop Elections Canada from prosecuting campaign overspending and various other irregularities and put in massive loopholes on the political contributions limitations. They already removed all tax funded political funding.
Along with many of their other moves they're totally changing Canada character including making us much more aggressive.
https://en.wikipedia.org/wiki/Inverted_totalitarianism
..which was actually a good decision.
As much as people would like it to be otherwise our economy runs on oil. Without cheap oil we'd be living a life not much different than Little House on the Prairie right now. We burn oil now to drive our economy and we will burn oil for another century.
I'm glad that BP found a way around this stupid law, we need to keep the oil that drives our economy flowing or we will have to choose between starving or freezing to death. President Obama is doing everything he can think of to drive out oil and doing next to nothing to find a replacement. Without a replacement to cheap oil we starve.
Sure, he gave gobs of money to people that claimed they could turn sunshine into gold but anyone that took even a glancing look at their business plans would have to know they were just throwing that money away. We need real solutions. We need nuclear power.
I've seen research in fusion power and I think it looks promising if given the freedom to conduct their research and government funds even close to on par with solar. Advanced fission power is even better. People like Flibe Energy have designs that they claim can burn up our existing nuclear waste. It seems that they aren't even asking for government money, just permission to conduct their research.
Wind power has promise IMHO, but it has to be set free from the constraints of government subsidies. There isn't profit in it unless they qualify for government funds so no one is doing any real research in it. Instead of trying to make it profitable through competition they make it profitable by lobbyists.
We'd have all kinds of jobs if only the federal government got out of the way. We'd be building nuclear power plants, oil wells, and windmills. We'd be swimming in cheap energy. It's energy that drives the economy, everything we produce, ship, or compute takes power. Cheap power means cheap everything else. We'd be exporting energy if the government got out of the way. Instead we have to play nice with dictators in far off places. We have to send our young men and women over to these hell holes to die because we just can't seem to figure out that it'd be much cheaper, easier, and safer if we drilled for the oil here instead.
We're going to be importing and exporting oil until we figure out something better to power our way of life. Dumping money into solar panels, windmills, and bio-energy is going to leave us cold, hungry, and poor. We've been subsidizing these things for decades and have little to show for it. Research in nuclear power has brought us a long way. We need more. Mostly we just need government approval, not their money. People know nuclear is safe, clean, and most importantly it is profitable.
I am armed because I am free. I am free because I am armed.
The restrictions should stay in place and in fact should be tightened. The US is a net importer of both crude oil and derivative products like gasoline, diesel, jet fuel, lubricant oils etc and should be doing everything it can to supply as much of that demand from domestic supply as possible to reduce the dependance on foreign oil.
Oil shortage would also fundamentally affect the US and Europe's economies by utterly annihilating them, followed by their populations. We're not talking about a bookkeeping problem like the current financial crisis, but an actual total end to almost all production. After all, even France, which runs on nuclear energy, still needs oil to transport goods, including food.
It's fun to live at the end of the era and see the abyss open wide and deep before us, eh? And nothing but windmills and a few failing old nukes to keep our technical civilization, just taking off now, afloat to cross it. And at the same time people like cayenne8 whine when anyone so much as mentions the controls.
Kinda makes one wonder if humanity's not currently encountering the Great Filter.
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
I made up the limitations to approximate the model that a district court judge would use to determine whether two musical phrases are "substantially similar". With which of the made-up limitations do you disagree, and for each, why?
Pig Oil? Maquilladora Oil? Several corporations, large and small, do the same in third world nations. They "process" the raw material just enough to localize the pollution and other loses and "externalities", and offshore the profits. Like exporting pig iron instead of ore, smelted using charcoal made from the destruction of rainforests - or dirty coal. Or aluminu(i)um made carelessly using mercury and other very toxic substances, and electricity from dams that flooded the local's lands, dislocated, and destroyed their lifestyles - and the cultures of whole local and native populations. Often, whole cultures that end up bloating the shanties around larger cities and towns.
BP assaults the waters off our shore with a toxic attack and now they steal our national treasure? Declare war on BP. Kill them all.