GAO says lifting oil export ban boosted Alaska’s treasury

But the boom in new oilfield development that removing the ban was expected to spur has not occurred, report concludes

by The Associated Press

Alaska’s treasury is about $50 million richer because the state now is allowed to export North Slope crude, but the boom in new oilfield development the move was expected to spur hasn’t occurred, a federal report has concluded.

Lifting the export ban increased the price of the oil by as much as $1.30 a barrel but has had little effect on consumers, oil production or the tanker industry, the General Accounting Office said in a report released the last week of June.

“Lifting the ban has not led to a large volume of exports,” the report said. Total overseas sales amount to about 5 percent of production, or roughly 60,000 barrels a day.

“Furthermore, oil production in Alaska and California has had no observable increase to date as a result of lifting the export ban,” the report said.

The U.S. Department of Energy had predicted as many as 25,000 new jobs by the turn of the century in the Alaska and California oil industry as a result of lifting the ban. But the only job increases cited by the GAO were between 58 and 115 additional seamen needed to man Asian-bound tankers carrying the North Slope crude.

The Alaska oil export ban dated to the 1970s, when worries about energy supplies were at a peak.

Prudhoe Bay, the first North Slope oil field, was being developed and Congress voted to ensure that this oil entered U.S. markets by banning its export.

But two decades later those fears had vanished and the world was awash in cheap crude.

At the same time, the three Republicans in the Alaska congressional delegation became committee chairmen after the Democrats lost control of the House and Senate in 1994. Their top priority was ending the export ban.

Their legislation sailed through both chambers, speeded by strong advocacy by the U.S. Energy Department and the endorsement of the Clinton administration.

Those opposed to ending the ban said they were concerned the move would increase gasoline prices on the West Coast. The GAO said it hadn’t.

“It’s tempting to say I told you so,” Alaska Sen. Frank Murkowski, chairman of the Senate Energy and Natural Resources Committee, said July 2. “I’m pleased this study validates the work we did in 1995 to end the injustice against Alaska.” He said Alaska was the only state unable to export its chief resource.

The state has been the biggest beneficiary of the ban’s reversal, the GAO said.

By allowing Alaska crude to be freely traded on world markets, the per-barrel price shot up between 98 cents and $1.30 over what California crude was fetching.

That price increase, together with lower transportation costs to serve Asian buyers, has boosted Alaska’s revenue by about $50 million a year over what it would have generated under a continuing export ban.

The GAO said it could find no convincing evidence that lifting the ban has stimulated new domestic oil production.