Open US crude oil exports to Mexico

With the United States poised to become the world’s leading producer of liquid petroleum products, now is the time for the U.S. to allow crude oil exports to Mexico. We have the type of crude Mexico wants to import, and if they don’t import it from the U.S. they will import it from elsewhere.  Certainly the United States would benefit from the flow of money back into our economy instead of allowing other countries to claim the profit.

Mexico, a major supplier of heavy grade crude oil to the United States, has publicly stated their desire to import lighter grades of crude oil to improve the efficiency of their refinery system.  In the U.S., we produce abundant quantities of the types of crude that Mexico needs.  Jose Manuel Carrera, CEO of PMI, Pemex’s oil trading arm said, “Our objective is that (crude imports) will begin this year,” potentially up to 70,000 barrels per day (today valued at just under US $2 billion per year).  If the ban were to be lifted, Mexico could import from the U.S., but with the ban still in place, they will likely buy the crude they need overseas.

{mosads}It makes no sense for Mexico to import crude oil from across the Atlantic when much of the supply they need is just across the Rio Grande. And, it makes no sense for the U.S. to ignore the opportunity.   

Crude oil exports from the United States were banned in the 1970s amidst concerns surrounding the OPEC oil embargo and rapidly increasing fuel prices.  It was difficult time for every business and family that owned a car or truck—virtually all Americans felt the impact. All over the U.S., cars lined up, sometimes for miles, waiting hours before getting to the pump. The economic shock was significant.  Congress responded with The Energy Policy and Conservation Act of 1975 (EPCA) which originally banned crude oil exports to every nation in the world.  

The ban on exporting crude oil made sense then, but it doesn’t anymore.  With record production, U.S. producers are now eager for new markets to export their crude – especially the oversupply of light oil which is better suited to refinery markets outside the U.S. We are already exporting record amounts of crude oil to Canada in what amounts to a free trade policy that has been in effect since 1985 when President Reagan amended the ban to allow U.S. oil exports to Canada only.  Now, almost thirty years later, including Mexico would be a timely and important acknowledgement. 

This past August, Mexico’s President Peña Nieto signed a comprehensive energy reform law that ends the national oil and gas monopoly of state owned Petroleos Mexicanos (Pemex). For the first time in 75 years, private companies can now competitively participate in the oil and gas sector.  Allowing oil exports to Mexico from the U.S. would send a powerful signal that the United States supports Mexico’s energy reform and wants Mexico to move in the direction of greater economic growth, job creation and national stability.

It is also an issue of fairness. Why Canada and why not Mexico? Shouldn’t Mexico be on an equal footing with Canada as a partner that we can work with to promote North American energy integration? This geographic balance would support the objectives set forth in the 1994 NAFTA agreement, further opening up channels of mutual prosperity on both neighboring borders.

President Obama has the authority to lift the ban on oil exports to Mexico, giving both Canada and Mexico equal access to optimize the energy resources of the North American continent. The president should take immediate action to allow U.S. crude oil exports to Mexico because it is consistent with our national interests, and it is the right thing to do.  

Both the U.S. and Canada have dramatically increased their oil production.  And Mexico, whose oil industry transformation is now fertile ground, stands ready to become an invaluable partner in enhancing our collective North American energy security. 

Quintanilla is the director of North American Business Development for Mercuria Energy Trading, one of the world’s largest commodities and energy groups.  She has over twenty years of experience in global energy commodities and international relations.  She is a first generation American of Mexican descent.