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Originally published Tuesday, January 7, 2014 at 5:05 PM

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American oil companies call for end to export ban

A surprising surge in domestic production of light, sweet crude — a particular type of oil that foreign refiners covet — has triggered growing calls to lift the restrictions, which were put in place after the Arab oil embargo of 1973.


The Associated Press and McClatchy Washington Bureau

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Foolish countries export irreplaceable resources. Let's not be one of them. Sometimes... MORE
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WASHINGTON — American oil companies have not been allowed to export crude for 40 years, but the industry wants to change that, even though the U.S. still consumes far more oil than it produces.

A surprising surge in domestic production of light, sweet crude — a particular type of oil that foreign refiners covet — has triggered growing calls to lift the restrictions, which were put in place after the Arab oil embargo of 1973.

But the idea is touching a nerve that remains raw four decades after oil shortages crippled the economy and led to the law that banned crude exports without a special license.

Alaska Sen. Lisa Murkowski, the top Republican on the Senate Energy Committee, on Tuesday argued that the ban, put in place after the 1970s Arab oil embargo, doesn’t makes sense given the current U.S. oil-production boom.

Her endorsement follows comments by Energy Secretary Ernest Moniz that the ban should be reconsidered, and a pledge by the oil industry’s main lobbying group to press Congress and the president on the issue.

“We need to be looking at it now,” Murkowski said after an address at the Brookings Institution research center in Washington, D.C. “I want to move this conversation, and I want to move it aggressively.”

But lifting the ban on selling America’s oil to foreign nations is controversial. Congress meant the ban to protect American consumers from gasoline shortages and price spikes, and some lawmakers say it’s still needed.

“Easing this ban might be a win for Big Oil, but it would hurt American consumers,” New Jersey Democratic Sen. Robert Menendez said in a recent letter urging the president to keep the export ban in place.

Menendez said exporting oil could raise the energy prices for American consumers by wiping out the difference between U.S. and global oil prices. The benchmark world price of oil, known as the Brent crude price, is about $108 a barrel while the West Texas Intermediate price stands more than $10 less.

But Murkowski said in her Brookings Institution address that lifting the ban would boost American oil production and wouldn’t cause U.S. energy prices to rise.

“The entry of this oil onto global markets will put downward pressure on international prices,” she said. “All things equal, this combination will help the American consumer.”

She said the oil production boom in North Dakota and Texas is leading to a glut of light, sweet crude, while the nation’s main refinery capacity on the Gulf Coast is mostly geared toward handling heavier grades of oil. Murkowski suggested this glut could dampen U.S. oil production, with impacts on price and jobs, unless the industry could sell it to foreign markets.

There already are exceptions to the export ban. Some American oil goes to Canada, and oil can be exported from Murkowski’s home state of Alaska. But there is more than enough demand for Alaskan oil on the West Coast and none of it has been exported since 2004, according to federal energy statistics.

America increasingly exports refined petroleum products, especially diesel and heating fuel but also gasoline.

Some oil-refining companies want the crude to stay in the United States, putting them at odds with oil producers that want access to lucrative foreign markets.

A spokesman for Senate Energy Committee Chair Ron Wyden, D-Oregon, said he’s interested in holding a hearing in the next few weeks on the issue but is cautious about lifting the ban and wants to explore what it could mean for consumers.

“There may be a time when crude-oil exports are appropriate, but is now that time?” said Wyden spokesman Keith Chu. “The U.S. is still importing about half our oil, including from some places that don’t always have America’s best interest in mind.”

Wyden, though, is expected to leave his energy-committee post soon to take over the Senate Finance Committee. Democratic Sen. Mary Landrieu, from the oil state of Louisiana, is poised to take his place and is receptive to ending the ban on exports.

Alaska Sen. Mark Begich another oil state Democrat who wants the ban reconsidered, said it makes sense to lift the ban, so long as enough crude remains to ensure affordable gasoline in the United States.

“This could help stimulate America’s oil industry and create American jobs here at home,” he said in an email.



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