Alaska Sen. Lisa Murkowski is calling for the federal government to end the general ban on exports of U.S. crude oil.
In a Jan. 7 speech at the Brookings Institution, a Washington, D.C., think tank, Murkowski warned of a coming glut of crude, particularly “light tight oil” from hot plays such as the Bakken and Eagle Ford.
Failure to lift the export ban could lead to a refinery crunch, potentially crimping crude production, she said.
“Lifting the prohibition on crude oil exports will serve to increase domestic oil production, and the entry of this oil onto global markets will put downward pressure on international prices,” said Murkowski, according to the prepared text of her speech. “All things equal, this combination will help the American consumer.”
Murkowski’s remarks add to growing sentiment to remove the oil export ban.
Energy Secretary Ernest Moniz recently suggested it might be time to reconsider the ban, in place since the 1970s when the Arab oil embargo rattled the nation.
Support for removal of the export ban, however, is far from unanimous.
Oil export exemptionsMurkowski is the top-ranking Republican on the Democrat-controlled Senate Energy and Natural Resources Committee.
In conjunction with her speech, she released a number of memos from the nonpartisan Congressional Research Service, including one that explains how export of U.S. oil is generally prohibited, but not completely.
Some exemptions are allowed, such as exports to Canada and exports of foreign-origin crude, the memo says.
Citing data from the U.S. Energy Information Administration, the memo says 83.5 million barrels of crude were exported from the United States from 2008 to 2012. Nearly all of that oil went to Canada, with very small volumes to two other countries: Costa Rica and Mexico.
Companies wishing to export oil that qualifies under an exemption must first obtain a license from the Commerce Department’s Bureau of Industry and Security, the memo says.
Another export exemption applies to Alaska oil from Cook Inlet and North Slope oil sent through the trans-Alaska pipeline.
Thus, Murkowski’s argument to lift the federal export ban isn’t that relevant for her home state.
“It really isn’t about improving the situation for Alaska, because we’re already there,” said Kevin Banks, a petroleum market analyst in the state Division of Oil and Gas.
Some Alaska oil was exported in the past, but nowadays it goes aboard tankers mainly to West Coast refineries, he said.
Refining mismatchMurkowski, in her speech, said the export ban also should be lifted for condensate, a very light oil.
The senator said she believes the Obama administration has statutory authority to lift the oil export ban on its own.
“Although the president has the authority to declare it in the national interest to lift the ban, another path is for the Department of Commerce to approve an application for export of crude oil or condensate under a provision in the law permitting the application if it can be demonstrated that those fuels ‘cannot reasonably be marketed’ here in the United States,” Murkowski said.
Domestic oil production is indeed facing the lack of a U.S. market, as much of the nation’s refinery sector is geared for heavier grades of crude compared to the rising volumes of light tight oil, she said.
If the administration is unwilling to act, Murkowski said she is prepared to offer legislation to lift the export ban.
“Opponents of oil exports will of course raise the specter of rising gasoline prices — I think, to scare off elected officials,” she said.
Opponents come outEven before Murkowski’s speech, one of her colleagues was urging Obama not to ease the oil export ban.
“When Congress first enacted limits on crude exports in the 1970s following the oil embargo, these laws were designed to enhance American energy security and protect U.S. consumers from volatility and price spikes,” Sen. Robert Menendez, D-N.J., said in a Dec. 16 letter to the president. “Despite changes in the global energy market, these goals should remain priorities in our nation’s energy policy. Easing this ban might be a win for Big Oil, but it would hurt American consumers.”
Menendez noted that American consumers have seen average gasoline prices rise from about $1.50 a gallon in 2003 to $3.50 today.
“Crude oil that is produced in the U.S. should be used to lower prices here at home, not sent to the other side of the world,” he wrote.
The Houston Chronicle, in a Jan. 8 story, reported a number of domestic refiners also were opposed to easing the oil export ban.
The story noted refiners were enjoying domestic crude priced well below the London benchmark, while selling record volumes of gasoline, diesel and other finished products to foreign consumers.