It's no secret that the energy boom we're experiencing in the U.S. and North America has rattled OPEC and may induce pressure within that group to suppress production.
Investors' Business Daily reports that domestic crude oil production rose 15 percent in 2013. It is projected to rise 13 percent this year, well ahead of recovering demand growth, to 8.5 million barrels per day. The flood of U.S. shale production will keep a lid on demand for OPEC barrels, the International Energy Agency said earlier this week. Experts agree that we'll soon be producing far more than we consume; they differ only on when that is likely to occur.
How will OPEC respond? IBD says that's the top item on OPEC's agenda at its next planned meeting. And a move to tighten supply would, under normal circumstances, push up the price of Brent crude and, to a lesser degree, the more insulated WTI benchmark.
If OPEC imposes and members fully comply with a quota reduction, might that, in turn, push Washington to lift the restrictions on oil exports? And is that a desirable outcome?
The U.S. restriction on exports remains unchanged since the Arab oil embargo in 1973. However, refiners are permitted to ship gasoline and diesel.
Rising U.S. production surely keeps downward pressure on global oil prices, but could lifting the ban on exports further depress those prices? Perhaps, but legislators and economists weighing these issues will study whether such a move might also create artificially higher domestic gasoline prices while suppliers selling abroad secure greater profits.
And at the same time, it's conceivable that domestic gasoline prices could trend lower even if restrictions on exports are lifted. Admittedly, that's a best-case scenario and that could be a tough sell at home no matter how much corporate cash is pocketed toward re-election efforts.
Meanwhile, folks on both sides of this issue are jockeying for position. Expect the debate on oil exports and restriction to gain considerably more attention this year. Should the U.S. eliminate export restrictions on oil? How and when that debate might end is anybody's guess, but don't expect a definitive conclusion any time soon.
Gregg Laskoski is a senior petroleum analyst with GasBuddy.com.