The debate over whether to end a four-decade ban on oil exports is heating up in Congress, but it promises to be a slow burn even in the GOP-dominated House.
The studies showing that lifting the 39-year-old restrictions would benefit the economy are piling up, and the political will to kill the export barriers is growing. The latest research came Tuesday from the Brookings Institution and NERA Economic Consulting, which said ending the restrictions could provide an economic boost of between $600 billion and $1.8 trillion, while lowering gasoline prices 9 cents per gallon in 2015.
But lifting the ban is a minefield for some Republicans who don’t necessarily want to go home and tell their constituents they want to send new bounties of domestic oil abroad after years of warning them about the dangers of being tethered to supplies from unfriendly nations — not to mention the potential ramifications of gasoline-pump politicking.
“I just know that some people are worried because they’re worried about the messaging. They’re worried about how they’re going to get hit from a political perspective if they were to be faced with a question of voting on oil exports,” Rep. Bill Flores, R-Texas, an advocate of ending the 1970s-era restrictions, told the Washington Examiner.
“The way the Left will come at this is we’re using American dollars to produce American resources that are going to be sold overseas,” Flores said. “I think there’s a compelling off-setting message — which is more positive — and that is we have a greater economic benefit by doing that than by trying to keep it here.”
That’s what the Brookings Institution study and others have suggested. At issue is a “mismatch” of refinery capacity and the type of light, sweet crude that is flowing out of shale formations like the Bakken in North Dakota and Montana. U.S. refineries in the Gulf Coast are equipped to handle heavier, sour varieties, and it is inefficient for them to try to process lighter types. Therefore, producers have warned of an impending glut that could restrain drilling if the export ban remains.
But the topic is still relatively new. When Republicans haven’t been full-throated in endorsing an end to the restrictions, they have hedged.
New Majority Leader Kevin McCarthy‘s central California district is near several refineries. Some of those companies want to maintain the restrictions since they are making money — exports of refined petroleum products, which are permitted, have grown 113 percent between 2007 and 2013, according to the U.S. Energy Information Administration.
McCarthy’s district, however, also hosts the state’s most active oil and gas production, a dynamic that underscores the complexity of the export ban. While McCarthy told the Wall Street Journal that he supports free trade, he didn’t necessarily seem ready to green-light oil exports, saying, “We actually get a little premium where our oil is cheaper simply from the fact of what we’re getting. If we didn’t, it would find its natural price and it would actually rise a little.”
Rep. Ed Whitfield, R-Ky., said his constituents didn’t mention crude oil exports when he was home in August. He said more time needs to pass so people — himself included — have more of the facts regarding how exports would affect gasoline prices.
“I’ve been reading a number of articles recently from some quite knowledgeable people who are of the opinion that the shale oil discovery may not be quite the bonanza that we expect it to be,” Whitfield, who heads the Energy and Power subcommittee of the Energy and Commerce Committee, told the Examiner. “And so because of the direct link between oil and gasoline prices — and that’s always a hot political topic here in the U.S. — anything about oil exports is going to be a little bit more dicey an issue.”
Whitfield said his subcommittee plans to hold a number of hearings on the topic next year to “get more of the facts.”
Some Obama administration officials, such as Energy Secretary Ernest Moniz, have said new domestic production has prompted a re-look at oil export policies. That’s a good thing, Whitfield said; he offered praise for the Obama administration’s approval of two companies’ requests to send a lightly processed form of a light crude called condensate abroad, though the Commerce Department ended up putting a hold on three subsequent requests in July.
Still, behind Whitfield’s words was perhaps a hope that lawmakers may not need to put their support behind either ending or upholding the restrictions if the Obama administration moves first.
“I don’t even know that a bill is necessary because the administration is already — the Commerce Department — has already provided some exemptions for certain kinds of oil,” Whitfield said.
In any event, there won’t be any action from the House before the November elections. Republicans are expected to put a package of energy bills up for a vote next week, but a GOP House leadership aide said oil exports won’t be part of it because the Energy and Commerce Committee hasn’t handled any legislation on the topic.
The oil industry has said it needs to do a better job of “educating” lawmakers on crude exports, and that includes Republicans. One senior official at an industry group said some younger members in the House GOP caucus have been skeptical of backing an end to the restrictions, but the source said some of that attitude is changing.
Flores said he didn’t notice a generational divide, but he did say export supporters must work to bring more Republicans into the fold.
“We’ve got a little ways to go, but it’s changing,” he said, later adding, “I think if we give them some fundamental economic ammunition to use in their thinking … I think they will come around. They’re just waiting on the facts to help them out.”
