Never mind dropping oil prices. U.S. producers are pushing harder than ever for the right to sell U.S. crude oil overseas.
It might seem counterintuitive: Oil prices are as low as they have been at any point since 2009 and the height of the Great Recession, and some say they could drop even further. But oil producers are playing a longer game, betting that long-term demand will be strong and new markets offer lucrative rewards for U.S. producers.
Supporters see possible inroads in a Congress controlled by Republicans who generally are considered more receptive to oil exports, as well as some signs that the Obama administration may at least be open to consider changes to longstanding policy, which bans the export of raw crude.
The ban was put in place in the 1970s after the OPEC oil embargo led to fuel rationing, high prices and iconic images of long lines of cars waiting to fuel up.
The American Petroleum Institute, the oil industry’s top lobbying arm, is running TV ads highlighting the growth of the U.S. shale oil industry as evidence that the there’s enough oil for both domestic and overseas markets. The organization lists overturning the ban as its top priority for 2015.
Jack Gerard, the organization’s president, said the policy is the result of “a politically motivated disconnect between today’s much-changed energy landscape and the political orthodoxy of some who continue to push for arbitrary and unfair limits or an outright ban.”
Besides the financial incentive, Gerard and supporters argue that lifting the ban would help control prices for consumers and give the U.S. a stronger hand in foreign policy.
Opponents argue just the opposite: They say exporting oil now would result in higher gas prices and prevent the U.S. from achieving a goal of energy independence. Opponents include many domestic oil refiners, which stand to lose business if crude oil is exported.
“The oil markets and the markets for various petroleum products are extremely complicated and I think that to mess with this upsets the equilibrium that’s there,” said Jay Hauk, executive director of Consumers and Refiners United for Domestic Energy, or CRUDE, which represents a group of oil refiners.
Hauck said the policy shouldn’t change while the U.S. continues to import great quantities of oil.
The U.S. imported 9.9 million barrels of oil per day in 2013, from some 80 countries, according to the U.S. Energy Information Administration.
Simply increasing U.S. production to eliminate imports is not that simple, though. Different types of oil have different uses, and U.S. production is predominantly lighter, “sweet” crude oil.
Many U.S. refineries are equipped to handle heavier crude produced by countries like Mexico and Canada. Producers argue that shipping to countries in Europe and Asia, where refineries are equipped to more efficiently handle lighter oil, makes economic sense until more U.S. refineries can efficiently process lighter oil.
“The reason for allowing exports is primarily that not all oil is the same,” argued a 2014 report by the Aspen Institute, which backed lifting the ban.
But even some supporters say it is too early to push for an up or down vote on lifting the ban.
Sen. Ted Cruz, R-Texas, proposed an amendment that would link lifting the ban with passage of legislation allowing the Canada-to-Texas Keystone XL oil pipeline to move forward. Soon afterward, two supporters of lifting the ban — Texas Sen. John Cornyn, the Senate’s No. 2 Republican, and Sen. John Hoeven, R-N.D. — said the amendment might be too much, too soon.
Dozens of members of Congress have not taken a public stance on the oil exporting issue. House Energy and Commerce Committee Chairman Fred Upton, R-Mich., has said the policy should be examined, but stopped short of pushing for legislation.
But other members have pushed for a vote: Rep. Joe Barton, R-Texas, plans to re-introduce legislation to lift the ban. Senate backers include members of Republican leadership: Cornyn and Rep. John Barrasso, of Wyoming, and Lisa Murkowski, chairwoman of the Senate Energy and Commerce Committee. Among Democrats, North Dakota Sen. Heidi Heitkamp, whose state is the nation’s second leading oil producer, is the biggest proponent of lifting the ban.
The Obama administration has made some recent adjustments on oil exports.
Last year, it allowed increased exports of so-called condensate, a lightly refined, lighter form of crude. Administration officials, including Energy Secretary Ernest Moniz, have said overall policy at least needs to be examined, though no action is pending.
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