Senate Debates Lifting Oil Export Ban for First Time in Decades
Most of the crude oil produced in the U.S. is the light, sweet type that domestic refiners are ill-fitted to handle.
February 2, 2014 - 10:41 pm
WASHINGTON – The Senate held its first hearing in 25 years on U.S. oil exports, weighing whether crude should flow freely from the nation’s shores for the first time since the 1970s.
Some lawmakers on the Senate Energy and Natural Resources Committee seemed to be open to the idea of lifting the ban on crude oil exports.
Sen. Tim Scott (R-S.C.) said as the U.S. increases its production of crude, and hopefully its exports, it will put countries in the Middle East in “a unique position to take a serious look at their own budgets, and their own revenues.”
With America poised to become the world’s largest producer of crude oil in 2015, many lawmakers say closing off access to global markets makes no sense.
“This ban threatens record-breaking U.S. oil production and American jobs by creating inefficiencies, gluts and other distortions,” said Sen. Lisa Murkowski (R-Alaska), who has been the leading voice in the Senate calling for expanded crude exports. “The architecture of U.S. energy exports must be renovated if our nation is to lead the world on issues of trade, the environment and energy.”
In November, the Energy Department reported that domestic crude oil production surpassed foreign imports for the first time in 20 years. U.S. crude production increased 28 percent, to 2.5 billion barrels annually, from 2007 through 2012, according to the department.
Committee Chairman Sen. Ron Wyden (D-Ore.), however, called for caution, saying the U.S. must weigh the costs to consumers before moving forward.
“It’s not enough to say some algorithm determines exports are good for the gross domestic product, or some other abstract concept,” he said. “American families and American businesses deserve to know what exports would mean for their specific needs when they fill up at the pump, or get their delivery of heating oil.”
Sen. Mary Landrieu (D-La.), who will become the committee’s chairwoman after Wyden assumes leadership of the Senate Finance Committee, said she wants more information about what types and quantities of crude U.S. refineries are processing.
“We have to be very aware and sensitive to the investments made by our refineries,” Landrieu said.
She provided other reasons for lifting the ban: new technologies available for exploration and production, and alternative fuels.
After the Arab oil embargo of 1973, Congress passed the export ban to conserve domestic oil reserves and discourage foreign imports. The 1975 law prohibits all U.S. crude from being shipped abroad, though exports of refined oil products, such as diesel and gasoline, are permitted.
The Department of Commerce can issue permits for crude exports in some rare circumstances, but has generally only allowed small quantities to Canada. Sending unrefined crude oil abroad requires a license from the Bureau of Industry and Security.
Some crude oil can be exported when a presidential finding is made that determines that doing so is in the country’s best interest.
President Ronald Reagan lifted the bans in 1985 and 1988 to permit exports to Canada. In 1992, President George H.W. Bush approved limited exports of heavy crude oil from California after environmental laws in the state significantly reduced domestic demand.