Last week's buzz surrounding the U.S. swapping oil with Mexico may end up being more hype than reality.
Read more: Swapping Oil with Mexico
The U.S Commerce Department opened the door last week for a limited amount of oil to be exported to Mexico when it approved an application from Pemex that would allow for the U.S. to exchange our light crude for Mexico’s heavy crude.
Many were hoping this signified a shift in opinion about the oil export ban that has been in effect since the 1970’s, but some analysts are now saying that the effort may be mostly symbolic.
Despite the ban on oil exports since the 1970s, the U.S. still imports a large amount of heavy oil from Mexico and Canada. Between January and May 2015, it is estimated that U.S. refineries imported about 700,000 barrels per day of Mexican crude.
Mexico wants our lighter crude oil because it allow their refineries to shift their output toward valuable gasoline and away from less valuable fuel oil. Wood Mackenzie estimates that Mexico uses about 300,000 barrels per day of gasoline more than it produces.