U.S. Exports Oil First Time in 40 Years

For the first time in 40 years the U.S. is exporting oil, effectively ending a half-century ban on selling American oil abroad and opening the door for a radical transformation of the world economy. The BW Zambesi, a Singaporean tanker, set sail from Texas headed for South Korea late Wednesday night, carrying some $40 million worth of American crude oil.

Who cares, right? Well, it's a big, big thing. The U.S. has not exported crude since the 1970s, when an embargo led by the Arab members of the Organization of Petroleum Exporting Countries pushed gasoline prices to unsustainable levels. The embargo prompted Congress to pass a law forbidding the overseas sale of American oil. The ban was instituted at a time when U.S. oil production was in steep decline. But now, the opposite is true.

New technologies have made it possible to extract oil from places where nobody would have thought to look in the 1970s. Hydraulic fracturing, or ‘fracking,’ injects water and chemicals into the ground at very high pressures, literarily extracting oil and natural gas from rocks. Of course it creates earthquakes in Oklahoma, Ohio and everywhere else, but money talks and the oil guys got there first, OK?

This increase of production could have huge political consequences, as the U.S. becomes less and less dependent on foreign oil and gas, much of which comes from volatile regions where America has few friends — think of Iran, Venezuela, and Russia. But it could also pose big problems. The environmental consequences of fracking are not clear (except for the folks in Oklahoma, Ohio and everywhere else where homes are disappearing into the ground). What's more, the sudden surplus of oil could also hurt the U.S. economy. In what may be the ultimate first world problem, having too much oil can push prices so low that drilling for it is simply not worth it anymore.