Respected consultants RBN Energy held a conference last week in Houston, partnering with engineering company Turner, Mason & Company. The conference theme was “Surviving the Flood” - examining the reality that there is too much crude oil coming into the US Gulf Coast refiners.

By all accounts, the conference was very good. The “day of reckoning” as one speaker called it, was coming some time in the next few years, when the flood of crude oil coming from shale production as well as from conventional domestic drilling would force the price of crude oil to be discounted by as much as $15-$20 per barrel.

According to RBN and TMC, there are several factors at work which will have a bearing on when this day of reckoning arrives. Production and transportation of crude to continue to increase, refining capacity to not grow, and whether US laws restricting the export of crude oil are lifted.

But as Stuart Ehrenreich of Cascade Resources & Consulting pointed out to me by email, some exports are already allowed. ”What most folks don’t realize is that swaps ARE ALLOWED under certain circumstances. It actually is quietly being done now.”

There’s no doubt that the increased domestic production has caused a commensurate drop in imports of crude oil, but there are some vested interests at play in the import game. PDVSA (Venezuela) and PEMEX (Mexico) own some refining assets in the Gulf, and will continue to insist on using their own oil, as will Saudi Arabia who own some Motiva assets.

The expression “Day of Reckoning” does seem a little melodramatic. Some prices are already being discounted, for instance the price that Saudi Arabia charges the USA compared to the price they charge in Europe. The idea of an event occurring in a day is great for headlines, but short of a “black swan” event it is more likely to be a gradual deterioration of the situation. Will there be some sort of tipping point? Unlikely.

Still, it is good to see the industry starting to address the key questions and consequences, though we are still to see an adequate embrace of the question of petcoke outcomes in this new world of shale oil. The oil industry is not going to address the needs of the aluminium industry, but the aluminium industry has also not yet come to grips with what is happening to one of its key raw materials.