Oil Exports. Image via Flickr.
WASHINGTON – Lifting the longstanding ban on U.S. crude
oil exports would boost the country’s economy and enhance its global
leadership, a former senior Obama administration official will tell
senators on Thursday, introducing a strategic dimension to the growing
debate over selling American oil abroad.
In testimony submitted ahead of a Senate energy committee hearing on
U.S. crude export policy, the Pentagon’s former undersecretary of
defense for policy, Michele Flournoy, argues “policymakers in the United
States should embrace these various benefits to our allies and
ourselves and liberalize our crude export rules.
“Market conditions merit such a step and security dividends will not
be fully realized without it,” said Flournoy, co-founder of the Center
for a New American Security.
A host of economic and geopolitical factors, from plummeting oil
prices, near-capacity storage facilities and sanctions against Iran and
Russia, are forcing both sides of the debate to address strategic
“Members of Congress are starting to focus on this issue in a big
way,” said George Baker, executive director of Producers for American
Crude Exports – a group representing independent companies demanding an
end to the export ban.
Related: North Dakota breaks export record
He said the possibility of using oil exports to address policy on
Iran or Russia is now invoked in his discussions on Capitol Hill or with
the Obama administration.
“The notion of selling oil into the international market comes up frequently,” Baker said.
On the other hand, oil refiners keen to prevent producers from
sending crude overseas counter that market realities limit the strategic
benefits of exports.
“The case that the U.S. can enhance its geopolitical stance is
incredibly overstated,” said Jay Hauck, executive director of Consumers
and Refiners United for Domestic Energy, a lobby group for east coast
and Texas refiners.
CRUDE argues that, instead of bolstering America’s global standing,
they expect most U.S. crude oil to be exported to China, rather than
“I think we have consumers on our side and a lot of business sectors
who have benefited from lower oil prices,” he said. “We keep reminding
Congress of that.”
Most observers see the push for changes to the decades-old ban as a
long game, with Congress continuing to debate the issue in hearings and
lawmakers floating bills to test the appetite for change.
The ban on unprocessed crude was introduced following the 1973 oil
shock, although U.S. laws currently allow exports of refined products
such as gasoline and diesel.
Some argue that strategic factors should not override other concerns.
The American Fuel & Petrochemical Manufacturers, a trade group
that supports lifting the ban, said “a decision should not be made in a
vacuum,” but as part broader reform of energy and shipping policies.
Some major oil companies want Congress or the administration to act on exports immediately.
“We’ve got to gain some traction this year. Certainly as we go into
an election year, it becomes harder,” said Ryan Lance, chief executive
of ConocoPhillips, in Washington last week.
Lance will testify at Thursday’s hearing.
(Reporting By Valerie Volcovici; additional reporting by Timothy Gardner; Editing by Bruce Wallace)
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