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A push to turn on export tap

 
U.S. oil prices are as low as they’ve been since 2009, yet oil producers are pushing to overturn an export ban. They’re betting that long-term demand remains strong. Opponents argue allowing exports would make U.S. energy independence unlikely. 
U.S. oil prices are as low as they’ve been since 2009, yet oil producers are pushing to overturn an export ban. They’re betting that long-term demand remains strong. Opponents argue allowing exports would make U.S. energy independence unlikely. 
Published Jan. 30, 2015

WASHINGTON — Dropping oil prices aren't slowing a drive from U.S. producers to ship their crude oil overseas and change a ban on exports that has lasted decades.

The cost incentive may not be obvious, with oil prices as low as they've been since 2009 and with some analysts predicting they'll drop further. But oil producers are confident of long-term demand and think that new markets will eventually offer big profits.

Backers see a changing landscape that includes a Republican-led Congress, generally viewed as more receptive to oil exports, and some signs that the Obama administration will consider modifications to the long-standing policy that bans exports of raw crude.

The ban is a relic of the 1970s, after an OPEC oil embargo led to fuel rationing, high prices and iconic images of long lines of cars waiting to fuel up.

Supporters of exports, such as the American Petroleum Institute, the oil industry's top lobbying arm, say those days are long gone. The group is running TV ads highlighting the growth of the U.S. shale oil industry as evidence that there's enough oil for domestic and overseas markets. The organization lists overturning the ban as its top priority this year.

Jack Gerard, the organization's president, and supporters argue that lifting the ban would help control prices for consumers and give the United States a stronger hand in foreign policy.

Opponents make the opposite case: Exporting oil now would result in higher gas prices, they say, and prevent the U.S. from achieving a goal of energy independence. Those opposed to a change in policy include many domestic oil refiners, which stand to lose business if crude oil is exported.

"The oil markets and the markets for various petroleum products are extremely complicated, and I think that to mess with this upsets the equilibrium that's there," said Jay Hauck, executive director of Consumers and Refiners United for Domestic Energy, or CRUDE, which represents a group of oil refiners.

Hauck said the policy shouldn't change as the United States continues to import great quantities of oil.

The United States imported 9.9 million barrels of oil per day in 2013, from about 80 countries, the U.S. Energy Information Administration reported.

Oil differences

Simply increasing U.S. production to eliminate imports is not that simple, though. Different types of oil have different uses, and U.S. production is predominantly lighter, so-called sweet crude oil.

Many U.S. refineries are equipped to handle heavier crude produced by countries such as Mexico and Canada. Producers argue that shipping to countries in Europe and Asia, where refineries are equipped to handle lighter oil more efficiently, makes economic sense until more U.S. refineries can efficiently process lighter oil.

"The reason for allowing exports is primarily that not all oil is the same," the Aspen Institute, which backs abolishing the ban, argued in a 2014 report.

But even some supporters say it is too early to push for an up or down vote to resume exports.

Sen. Ted Cruz, R-Texas, proposed an amendment that would link abandoning the ban with passage of legislation allowing the Keystone XL oil pipeline from Canada to Texas to move forward. Soon after, two supporters of lifting the ban — Texas Sen. John Cornyn, the Senate's No. 2 Republican, and Sen. John Hoeven, R-N.D. — said the amendment might be too much, too soon.

Cornyn, Sen. John Barrasso of Wyoming and Lisa Murkowski, chairwoman of the Senate Energy and Commerce Committee, are among those interested in overturning the ban in the long run. Sen. Heidi Heitkamp, D-N.D., whose state is the nation's second-leading oil producer, shares their position.

Still, dozens of members of Congress have not taken a public stance on the oil exporting issue. House Energy and Commerce Committee Chairman Fred Upton, R-Mich., has said the policy should be examined, but he stopped short of pushing for legislation.

Other House members, however, have pushed for a vote: Rep. Joe Barton, R-Texas, plans to reintroduce legislation to lift the ban.

With the Senate passage of the Keystone XL pipeline bill 62-36 on Thursday, the move toward an export amendment would be falling into place, except that the president is expected to veto the Keystone legislation.