The U.S. Oil Export Surge Is Coming By Dr. Kent Moors

One is the growing use of the East Siberia-Pacific Ocean (ESPO) export pipeline, which moves Russian oil for export and also has a spur for the direct transit of crude by land to Northwest China.

As this develops, ESPO will also introduce a new crude benchmark rate (also named ESPO). In fact, these flows have already become sufficient enough to justify pricing quotes from Argus in London. What’s more, the oil is of better quality than Saudi crude (lower sulfur content) and, once the confidence in regular deliveries builds, it should begin to cut into the additional price paid by Asia.

But this is not going to happen overnight.

Even still, Asian consumers would certainly welcome another major oil exporter that was in a position to compete with OPEC and Russian sources. The continent is certainly going to need all of the oil it can secure.

Shifting the Flow of Oil to the Pacific Northwest

That’s why what’s happening in places like Seattle is so important.

The combination of U.S. and Canadian production becoming available – all without sacrificing any domestic needs – is tailor-made for where the energy balance is heading. As the energy balance shifts toward Asia, so also will the exports.

Already, the movement of crude south from Canada to the United States by rail has emerged as a major change in North American transit corridors. Plans are underway to build central offloading facilities to move oil from railcars and pipelines to tankers headed across the Pacific.

At some point, the Keystone XL pipeline will be approved and construction of the last major leg in the largest North American crude pipeline network will finally get underway.

By that point, the ability of the United States to be effectively self-sufficient in both oil and natural gas will have become a reality. By 2025 (maybe even sooner), the American market will only need to import about 30% of its daily requirements. That’s down from almost 70% only a few years ago.

Those imports will come primarily from Canada. Other sources will only be utilized if they benefit from cost-side considerations.

As a result, the United States will be left with significant additional production over and above what is needed. So there is no longer any strategic reason to prevent U.S. oil exports.

In fact, there is too much to gain from an employment and tax base perspective, which means the political pressure to allow exports will grow.

As the policy change meets the infrastructure development, a number of companies all along this new value chain will become great targets for investment.

Also, as we begin to see a short-term ceiling forming for oil prices, do not forget these simple facts.

First, as I recently explained, making profits in the oil sector is no longer dependent upon the rising price of oil.

Second, the United States will have plenty of excess oil for some time to come.

Finally, even with the changes taking place in the trading balance, prices (and therefore profits) will be higher in Asia.

All of these conditions will set the stage for the coming U.S. oil export surge… and our ability to profit from it.

And don’t forget: The Gulf and East Coasts are about to benefit big time from the export of liquefied natural gas (LNG) to Europe and Asia.

It all adds up to be an exciting time for energy investors.

More from Dr. Kent Moors: Making money in the energy sector is no longer pegged to higher oil prices. But it does require a different approach. This is the best way to profit from crude oil prices right now…