Long-Time Oil Export Ban Could Be Lifted
The Senate Energy Committee passed a bill at the end of July that if passed by the wider Senate floor and House, would remove a ban on the U.S. exporting crude oil and natural gas products that has been in place for four decades, as the response to the 1973 Arab oil embargo. The panel consisted of 22 members, 12 of which voted for and effectively passed the bill. John Boehner, the Speaker of the U.S. House of Representatives, spoke in support of lifting the export ban for the first time, signaling that the House might be ready to entertain such a bill.
Under an exemption to the rule, the U.S. has been exporting to Canada, at more than half a million barrels of crude, which is only a little over 5% of what our nation makes in one day. The Senate Energy Committee wants to see us shipping to other nations as well. Alaska Republican Lisa Murkowski, who has supported lifting the domestic oil export ban for some time now, sat as chair on the committee. Murkowski believes that the bill no longer applies since it was written before the U.S. became such a major player in the energy business.
Because of the recent boon in hydraulic fracturing, or fracking, the face of the United States’ energy industry has changed. Since 2007, oil production had skyrocketed over 80% and we are now collecting 9.5 million barrels each day. While we still import a lot of oil, we are bringing in far less than what we used to be, at about 27%, which the U.S. Energy Information Administration said is the lowest since 1985.
Oil companies, lawmakers and other Industry groups are excited about the bill and applaud the potential end of the ban. They believe it will provide a boost to the nation’s economy as well as strengthen national security. “Free trade in energy will allow America to harness the full economic opportunities created by our energy revolution,” said American Petroleum Institute Executive Vice President Louis Finkel. Jamie McInerney, a spokesperson for Pace, an export lobby group, said, “Passage of this bill will help America realize its potential as an energy superpower and adds to the growing momentum in both houses of Congress to lift the outdated ban on oil exports.”
One may wonder why we want to start exporting our oil while we are importing oil from other countries at the same time. Consider this: a great number of the refineries along the Gulf Coast are built to handle medium- and heavy-grade oil, the kind extracted by the Middle East. The U.S. is producing a lighter oil that requires specialized equipment to process. While there are a fair number of these refineries in the U.S., it’s more expensive to refine our “home-grown” lighter oil than it is the heavier imported stuff. If we are allowed to export, both foreign and domestic oil companies can work together, creating a “win” for all involved.
Though the bill has it’s fair share of support, there are a handful of Congress Democrats who are wary of the move. They worry that U.S. consumers could be paying more at the pump if we start exporting and wonder if we would be better to keep the ban in place. But overall, economists think the lifting would bring gas prices down even further than it is now. Many nonpartisan groups, including IHS, believe that exporting oil again would be a good more for the U.S.