It’s easy to understand why nothing irritates oil and natural gas companies more than government regulations.
Regulations are issued by scores of federal agencies, ranging from the Commerce, Energy and Interior departments to the Environmental Protection Agency, and the oil and gas industry is kept busy slicing and dicing the arcana of government rules controlling everything from energy production and distribution to exports. And this is on top of a labyrinth of state regulations that affect oil and gas companies. The industry spends hundreds of millions of dollars every year complying with all of the rules and regulations, even though many are unnecessary or even absurd.
Take the federal rule for exporting very light petroleum known as condensate that is flowing in large quantities from America’s prolific shale fields in Texas, North Dakota and Pennsylvania. Condensate can be exported, but only if it happens to be produced from a gas well. If the same material comes out of an oil well, it can’t be exported without special permission from the federal government. Domestic oil producers are being denied a premium that has been as high as $14 per barrel this year – the difference between the West Texas price and the more expensive Brent crude — by not being allowed to export condensate and other types of domestically-produced oil.
The full text of this article is available at The Hill. It will be posted to www.aei.org in 60 days.
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