With oil prices hitting a five-year low, the timing couldn’t be better for Thursday’s House hearing on ending a 39-year-old ban on exporting crude, advocates of ending the restrictions say.
The hearing in the House Energy and Commerce subcommittee on Energy and Power will give supporters of ending the ban their first shot at pushing for a change, though the meeting also is expected to give curious lawmakers a chance to ask questions.
Rep. Joe Barton, R-Texas, who introduced legislation this week to end the restrictions, says low gasoline prices can help smooth discussion on the topic, as many people fear sending crude abroad would raise pump prices.
“Any energy issue is better to debate when prices are down than when prices are up,” the Texas Republican told the Washington Examiner.
The Brent crude international index fell below $65 per barrel Wednesday as oil continued its months-long fall — in June, it was trading at more than $110. The low cost per barrel is helping to keep gasoline prices low, and the U.S. Energy Information Administration predicted motorists would pay on average $2.60 per gallon through 2015.
Barton thinks his legislation to end the ban Congress enacted following the 1975 Arab oil crisis could pass the House next year.
That’s probably too ambitious a timetable. Lawmakers on both sides of the aisle are sensitive to constituents’ concerns about gas prices, and many have yet to take a position on exporting crude. Most Democrats are also likely to oppose the measure out of concerns over the production of greenhouse gas-emitting fossil fuels and pushing gas prices higher.
“The economic impacts of lifting the crude export ban is an area of considerable uncertainty and disagreement,” Democratic staff on the House Energy and Commerce Committee said in a memo ahead of the Thursday hearing.
Rep. Ed Whitfield, R-Ky., chairman of the Energy and Power subcommittee, said members of his panel are “fairly open” to the idea of crude exports, but that he’s not certain where exactly members of his caucus stand. Much of that has to do with sensitivity to gas prices, he said.
“Gas prices, as you know, is such a visible issue. It affects everyone,” Whitfield said. “And even though it’s hard to equate exports with the price of gas, many people view it as directly related. So the political question is a little more intense, I would say say, on oil exports than it is on natural gas exports.”
The concept of exporting crude is still fresh, given how rapidly U.S. oil production has risen.
“There needs to be more information about this,” said Deborah Gordon, energy and climate director with the Carnegie Endowment for International Peace, who is scheduled to testify at the House hearing. I think we’re still in a bit of a guessing game.”
More research needs to be done, but several initial studies have indicated exports could slightly reduce gasoline prices while generating more federal revenue.
The decision to end the restrictions has been the subject of intense lobbying over the past year. Refiners opposed to exports have sponsored some studies, and oil producers have backed others, as both industries grapple for favorable public opinion.
Refiners want to keep the ban in part because they have seen a windfall from booming energy production in Texas and North Dakota, since refined petroleum products such as gasoline aren’t subjected to the same export restrictions as crude oil.
But oil producers say refiners are backlogged — a claim refiners deny — and that they aren’t equipped to process the light sweet crude being produced in shale formations that have driven U.S. output to an anticipated 9.3 million barrels per day in 2015.
“The market for crude oil is global, but we don’t participate in it,” said Bill Shughart, a former Federal Trade Commission economist who is now research director and senior fellow at the Independent Institute at Utah State University. Shughart is also involved with “Unlock Crude Exports,” a pro-export effort spearheaded by free-market group the American Council for Capital Formation.
Proponents for nixing the ban said that the current drop in prices could buoy their case.
The Organization of Petroleum Exporting Countries’ late November decision not to curtail production sent oil prices into a tailspin, as the market is viewed as being oversupplied. The 12-member oil cartel, led by Saudi Arabia, is trying to test the price point at which U.S. shale production slows. That’s because U.S. competition has eaten away some of Saudi Arabia’s market share, suppressing the price its state-run oil company can fetch per barrel.
That, Barton said, could help underscore the point that oil prices are set on a world market and that sending crude overseas wouldn’t affect how much motorists pay to fill their vehicles.
“If people like $2.50-a-gallon gasoline, they should be for my bill because if we allow more U.S. oil to go into the world markets, you’re going to maintain that price pressure on the OPEC cartel and Russia,” he said.
