The United States Department of Commerce announced the approval of licenses for swaps of U.S. light crude oil in exchange for imports of heavy Mexican crude oil.
Currently, the United States is prohibited from exporting its crude oil due to a crude oil export ban that was established in 1975 and has since hindered the American energy market in light of great advancements in energy exploration.
The Department of Commerce was able to approve these licenses as delegated by the President, through his authority in the Energy Policy and Conservation Act.
The agreement announced today will be mutually beneficial for both countries. Many American petroleum refineries are not fully equipped to process light crude oil, the type that is abundant in shale plays across the United States. On the other hand, Mexico produces great quantities of heavy crude oil while their refineries are better equipped to process lighter crude. The oil swaps will help for production in oil refineries across the U.S. and Mexico.
“Texas will gain tremendously from this oil swap agreement. The petroleum industry in Texas, in large part due to shale production, such as the Eagle Ford Shale in my district, has revitalized our nation’s economy,” said Congressman Cuellar (D-TX28). “These swaps will further positively impact energy exploration in Texas and the United States. The U.S. and Mexico have a great relationship when it comes to trade and commerce, and today’s announcement is a clear sign that both countries are eager to further develop their energy sectors. I thank Secretary Penny Pritzker and Under Secretary of Commerce for Industry and Security Eric Hirschhorn, as well as my colleagues Rep. Will Hurd and Rep. Michael McCaul for their important role in securing this agreement.”
“An agreement like this is a strong step towards North American Energy Security, which is an integral part of our National Security. I believe it will open the door for more reforms that move North America towards energy independence,” said U.S. Representative Will Hurd (R-TX23), who spent more than nine years serving as an undercover CIA officer and sits on the House Committee on Homeland Security. “Energy trade is a key component of our economic relationship with Mexico and recent changes in their energy policies have given us an opportunity to strengthen that exchange. The American Energy Renaissance that has flourished in Texas due to Eagle Ford, Permian Basin and Barnett shale exploration will continue to strengthen because of this decision.”