Debate Rages Over Exporting American Oil

Is the U.S. ready to lift its own ban on exporting oil to foreign nations? Even Republican members of Congress are calling for an end to the law.
By @LesNeuhaus |
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    Total Petrochemicals Port Arhtur refinery is shown Wednesday, Dec. 2, 2009 in Port Arthur, Texas. Over the past several years, Total Petrochemical's sprawling oil refinery in southeast Texas has sprayed tons of sulfuric acid and carbon monoxide into the sky.  (AP Photo/David J. Phillip)

    Total Petrochemicals Port Arhtur refinery is shown Wednesday, Dec. 2, 2009 in Port Arthur, Texas. Over the past several years, Total Petrochemical’s sprawling oil refinery in southeast Texas has sprayed tons of sulfuric acid and carbon monoxide into the sky. (AP Photo/David J. Phillip)

    With U.S. oil reserves predicted to surpass that of giants like Saudi Arabia, a nearly 40-year ban on the selling of domestic oil abroad is being reexamined by congressional and business leaders, according to various reports Wednesday.

    Top Republican on the Senate Energy Committee Sen. Lisa Murkowski said in a speech at the Brookings Institution on Tuesday that the ban is pointless now, given the current major spike in U.S. oil production, much of it emanating from the Bakken Oil Fields of North Dakota, West Texas and the Gulf of Mexico. She said she’s prepared to introduce legislation to modify the law if the president doesn’t act.

    “I think we should think carefully about the conditions in which those bans were put into effect and to consider whether or not they serve the public interest, and if they ever did,” she said during her presentation. “Most commentators assume that Congress and the administration will be slow to address these issues. Opponents of oil exports will raise the specter of rising gasoline prices I think to scare off elected officials.”

    Murkowski is afraid that opponents are trying to make members of Congress worried about getting re-elected, and that their constituencies may not like the idea of their oil going to countries whose policies run counter to America’s.

    Her support to ending the ban comes on the heels of comments made by Secretary of Energy Ernest Moniz, who said the law, put in place after the 1970s Arab oil embargo, should be reviewed. Big Oil is also pledging to press the White House on the issue. But some wonder how much of a role lobbyists are playing in the debate.

    “There are a lot of issues in the energy space that deserve some new analysis and examination in the context of what is now an energy world that looks nothing like the 1970s,” Moniz said at a conference last month, according to Bloomberg BusinessWeek.

    The 1975 Energy Policy and Conservation Act called for no exportation, with limited exceptions like deals with Canada and Mexico, or other special conditions. Murkowski said, for example, that the U.S. is exporting about 65,000 barrels per day to Canada.

     

    Opponents say Big Oil wants more profits

    But opponents see the potential of increased oil production in the U.S., which would certainly be needed to meet the requirements of increased exportation obligations if the ban was lifted, as folly.

    One opponent, Democratic Sen. Edward J. Markey, a member of the Senate Commerce, Science and Transportation Committee, thinks Big Oil — especially ExxonMobil, the world’s most profitable company — is behind the new debate.

    In a statement on Dec. 12, Markey said, “The growing chorus from the oil industry to change longstanding U.S. law to permit the export of American crude oil is a disturbing trend. There can be no doubt that this is now a coordinated attack by the oil industry on the U.S. law that bars exports of crude oil from the United States. This oil should be kept here in America, to benefit our consumers and to reduce our dependence on imports from the Middle East.”

    He also said the oil industry’s claim that increased drilling as a means to help lock in energy security for the nation’s future is a ploy, “or else the industry wouldn’t be seeking to export U.S. crude oil abroad. Oil companies have already sent nearly a billion barrels of our refined fuels overseas last year.”

    Markey said ExxonMobil and other oil companies should end their attempt to undermine U.S. national security.

    Other opponents to getting rid of the ban are refinery companies themselves. According to a Washington Post report from Wednesday, “since they can buy oil at artificially low prices (domestically) and then export the gasoline and diesel abroad at a markup” since the latter two aren’t a part of the ban.

    Blake Clayton, adjunct fellow for energy at the Council on Foreign Relations, wrote in July that “Were the ban overturned today, crude exports would immediately rise by several billion dollars a year, according to industry executives, likely surpassing five hundred thousand barrels per day by 2017.”

     

    Congress to lift law may be tougher than thought

    Getting the notoriously partisan Congress to switch a deeply-ensconced energy strategy won’t be easy.

    The way to convince them may be to point out the ample surplus in light, sweet crude that is pulled from the ground in the U.S. and barred from export, Murkowski said. Many U.S. refineries, particularly along the Gulf Coast, were constructed to process heavier crude supplies from countries like Venezuela and Saudi Arabia, and while some have adapted, larger changes are unlikely soon.

    If Congress is persuaded that lifting the ban to sell the lighter oil is in the national interest of the U.S. economy, then there is a greater chance the law will be reversed. They could rewrite the underlying ban imposed in 1975. Another option is that the Commerce Department, with permission of the White House under the banner of national security, could choose to interpret the statute differently or more broadly.

    In the end, President Barack Obama is caught in the middle. Americans want cheaper gas, not more expensive gas. And Saudi Arabia, a major U.S. ally, depends on their annual exports to America. But relations between the two have been strained lately over U.S. foreign policy decisions in the Middle East, mostly relating to Egypt’s  military leadership, Syria’s civil war and a new diplomatic dialogue between the U.S. and Iran.

    If America lifted the ban and told the Saudis it didn’t need as much oil as it did before, if any, tensions in the Middle East could escalate even more, as the Saudis increasingly draft and support policies in the region that run directly counter to the U.S. And it’s not just Obama having to consider all of this — so does Congress.

     

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