Senate Committee on Energy & Natural Resources: exempt allies from export ban
Senator Lisa Murkowski (R-AK) has been a vocal proponent of lifting the U.S. crude export ban during her time as head of the Senate Committee on Energy & Natural Resources. Recently, Murkowski presented the findings of a report entitled “Rendering Vital Assistance: Allowing Oil Shipments to U.S. Allies,” that suggests that the president could exercise his executive power in order to exempt ally countries from the export ban.
“Lifting the ban will bring an array of benefits to our nation: more jobs, more revenues, more production, more security and more diplomatic leverage on the international stage,” said Murkowski. “The report further develops an argument I’ve been making: that even while Congress works to remove the export ban, the administration already has authority, explicitly delegated to it by Congress, to allow for greater oil exports.”
Canada Granted Exception by President Reagan in 1985
The report notes that President Reagan authorized all crude oil exports to Canada for consumption in Canada in 1985, establishing an exemption for that country. According to the report, “The existing legal structure allows for exemptions for virtually any reason.”
The administration could allow exports of condensate or light crude oil on the grounds of national interest due to the mismatch in production and refining capacity, or it could exempt production from certain plays that lack access to infrastructure, but the report says that exempting countries that wish to import oil would likely be the easiest option.
Nothing prevents a country from requesting that it be exempted from the ban, like Canada. The report says that there is no standard procedure for such a request, but it could be transmitted by letter or by a minister or ambassador. The report goes on to say that companies could also submit proposals for transactions directly to the Department of Commerce.
President Obama unlikely to act alone: Marwood Group
Despite the precedent for exempting countries from the export ban, it is unlikely that President Obama would use his executive authority to act without Congress, according to Marwood Group Energy Research. “While we do believe that the president would join with Congress to lift the export ban, he will be hesitant to make a major policy change alone.”
The Marwood Group notes that the national security angle is being used more frequently in order to support the end of export bans. The national security pitch “has the added benefits of bringing hawkish Democrats into the fold and giving the President a reason to move on his own.”
Other issues still remain as obstacles to the ending export bans, however. Hours after Murkowski released the report, Senate Energy and Natural Resources Ranking Member Maria Cantwell (D-WA) issued a statement reiterating concerns over the consumer price impact of lifting the ban.
“The information we have thus far is inconclusive to how lifting the ban on oil exports may impact consumers,” said Cantwell.
Lifting Ban Won’t Raise Gas Prices: Medlock
Research done by Kenneth Medlock III from Rice University, and other research, suggests that lifting the ban would not raise the consumer price of gasoline. According to Medlock, “the prices of refined products sold in the U.S. are in a parity relationship with international prices for refined products. Thus, the discounted prices for oil produced in the U.S. are not reflected in U.S. gasoline and refined product prices.”
Ain’t Gonna Happen in Congress: Hofmeister
In an earlier interview this spring with John Hofmeister, former President of Shell Oil Company, Oil & Gas 360® asked for his view about the U.S. ban on exporting crude oil:
“I doubt that the political system will move on this item. I doubt there will be sufficient debate and nonpartisan evaluation of the situation to allow for an honest and straightforward up or down vote in the Congress. So I frankly don’t see the law changing. There may be some exceptions made, increased exceptions made to move product out of the country, but I don’t see Congress lifting the ban,” Hofmeister told Oil & Gas 360®.