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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.

by
Rodrigo Sermeño

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February 2, 2014 - 10:41 pm
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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.

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Top Rated Comments   
Light sweet crude, generally called Midland intermediate, or West Texas Intermediate is over 30% of all domestic oil producition. 20% of that is just in the Permian Basin in West Texas.

This crude is the standard pricing mechanism that determines the price of oil. If the media says the price of oil is 90 bucks a barrel, that price is for WTI.

To say the refiners are not set up to refine such is pure non-sense. They have been refining such for over 70 years.
42 weeks ago
42 weeks ago Link To Comment
Last I heard we hadn't built a new refinery in the United States in 3-4 decades. If we have an abundance of light, sweet crude, why isn't anybody starting to build one here? Pretty soon, we could say goodbye to any need to deal with religious fanatics who want to destroy us at all.
42 weeks ago
42 weeks ago Link To Comment
All Comments   (7)
All Comments   (7)
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Instead of a pipeline which will take years and billions of dollars to build, and
forever to make safe, why not build a refinery near the source of the crude?
Or is that just too simple ??
41 weeks ago
41 weeks ago Link To Comment
This will only be voted on if Harry ( The Dictator of the Senate ) Reed lets it be voted on. 99 other senators and staff being paid by the taxpayers and don't do anything unless Harry lets them. WHY?
42 weeks ago
42 weeks ago Link To Comment
"“It’s not enough to say some algorithm determines exports are good for the gross domestic product, or some other abstract concept,” he said.""....but when the left wants us to trust our GDP to an algorithm that says Global Warming is a problem, they have no problem with that do they?!?
42 weeks ago
42 weeks ago Link To Comment
Light sweet crude, generally called Midland intermediate, or West Texas Intermediate is over 30% of all domestic oil producition. 20% of that is just in the Permian Basin in West Texas.

This crude is the standard pricing mechanism that determines the price of oil. If the media says the price of oil is 90 bucks a barrel, that price is for WTI.

To say the refiners are not set up to refine such is pure non-sense. They have been refining such for over 70 years.
42 weeks ago
42 weeks ago Link To Comment
And even if they have problems refining it, its not like they couldn't build a new refinery or modify one they already have. That they haven't tells me its not that much of a problem.
42 weeks ago
42 weeks ago Link To Comment
Last I heard we hadn't built a new refinery in the United States in 3-4 decades. If we have an abundance of light, sweet crude, why isn't anybody starting to build one here? Pretty soon, we could say goodbye to any need to deal with religious fanatics who want to destroy us at all.
42 weeks ago
42 weeks ago Link To Comment

Environmental regs. I don't know the details, but they can expand an existing refinery much cheaper than build a new one, so that's what they do the extent they do anything at all to expand capacity.
42 weeks ago
42 weeks ago Link To Comment
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