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Lawmakers Mull Lifting Longtime Ban on Oil Exports

Public Policy

Lawmakers debated ending a decades-old ban on exporting crude oil overseas on Thursday, revisiting a restriction enacted at the height of America’s oil worries and seen by some as outdated amid a domestic energy boom.

At a hearing of the Senate Energy and Natural Resources Committee, lawmakers and policy experts weighed the price stability of oil in the United States, job creation, and national security considerations relating to the 1975 Energy Policy and Conservation Act. Created in response to the famous Middle East oil embargo and subsequent oil crisis in 1973, the law keeps all U.S. crude oil business within the country, while still allowing the export of refined oil and gases.

“We are witnessing an energy revolution,” said Louisiana Democratic Sen. Mary Landrieu. “That’s why we’re having this testimony today.”

Lawmakers and experts said improved technology, a weakened job market and the current “energy renaissance,” which includes a natural gas boom, are all reasons to reopen debate about lifting the ban and adding American crude oil to the global market. Congress remains fiercely divided over energy policy in general, making consensus on a legislative change difficult to reach. With modest aims, senators painted the hearing as just the start of a process.

“[This] is the beginning of many very considered and thoughtful discussions on what is a very timely issue,” said Alaska Republican Sen. Lisa Murkowksi, the committee’s top Republican.

Harold Hamm, chairman and CEO of the petroleum company Continental Resources, said the law was born of oil scarcity fears that no longer exist.

“Experts… agree we will be energy independent in terms of crude oil within a decade or two,” said Hamm, a proponent for lifting the ban. “Through technological breakthroughs in precision horizontal drilling, we can develop resources previously thought to be unattainable.”

Opponents of lifting the ban conceded oil shortages are no longer the problem, but said prices could rise if the country begins exporting crude oil, to the detriment of American consumers.

“Any oil sent overseas must be replaced, which could raise prices,” said Daniel Weiss, the director of climate strategy at the liberal Center for American Progress. “Oil produced in the United States is significantly less vulnerable to supply disruptions and therefore provides more energy security.”

Opponents noted that the OPEC oil cartel, whose embargo sparked the 1973 energy crisis, still produces about 40 percent of the world’s crude oil, according to the U.S. Energy Information Administration.

“The global market is influenced by an oligopoly where OPEC countries control production in order to set prices,” said Graeme Burnett, senior vice president of Delta Air Lines, who predicted OPEC would lessen its crude oil supply if the U.S. entered a global market in order to maintain high prices.

But Amy Jaffe, the executive director of energy and sustainability at University of California, Davis, argued that lifting the ban would dilute OPEC’s market share and therefore its power over prices. Proponents for lifting the ban also said doing so could create domestic jobs.

“The energy sector has added jobs for millions of Americans—both directly and indirectly through energy service and equipment companies,” Hamm said. “Lifting export restrictions will strengthen our domestic oil industry, a critical component of our economy.”


2 Comments on "Lawmakers Mull Lifting Longtime Ban on Oil Exports"

  1. ghung on Fri, 31st Jan 2014 1:25 pm 

    “But Amy Jaffe, the executive director of energy and sustainability at University of California, Davis, argued that lifting the ban would dilute OPEC’s market share and therefore its power over prices.”

    Not sure how that would work when the US still imports ~40% of its oil. I notice she didn’t say (in the quote anyway) that Americans will be paying less.

    “Those who might have relied on the fact that we would run out of this resource and therefore be forced by lack of available resource to switch to something cleaner, this is not going to happen. Not in my lifetime. Maybe not even in my children’s lifetime,” said Amy Myers Jaffe, executive director for energy and sustainability at the University of California, Davis.” [Forbes, Dec 1, 2013]

    Didn’t she also predict $20 oil by 2010 sometime back? Having trouble digging that one up. Anyway, I’m all for exporting as much US oil and gas as we can; move things along. It’ll certainly pop the ‘American energy independence’ myth soon enough.

  2. robertinget on Fri, 31st Jan 2014 1:45 pm 

    There’s no US law against oil exports to Canada. Why not simply make a fungible
    swap thereby eliminating the need for physically moving any Canadian Oil, US bound, whatsoever.
    Western Canada fills needs of Ontario and Quebec with home grown instead of higher priced Brent.

    The US trade deficit shrinks, XL pipeline put to better use carrying water, which if spilled on parched rangeland goes unreported.

    One little problem. The US still IMPORTS
    seven Million barrels P/D with ‘only’
    a million point two coming from Canada. Currently, US crude production
    is up… but a bit shy if we still require imports of seven million barrels a day.

    Where does Exxon get off pushing exports when raising US gasoline prices
    result? I’ll bet XOM would like to see
    US taxpayers subsidize gasoline prices
    by LOWERING existing Fed taxes on liquid fuels. This way US economy begins to look more like Venezuela, Nigeria or Iraq.

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