Calls to lift export ban on crude grow with Iran deal

Under the terms of the agreement reached by the U.S., five world powers and Iran, Iranian oil is likely to be exported within months once sanctions are lifted. Republicans coalesced around the idea that allowing Iran to export crude was unfair when the U.S. won’t permit its own producers to do the same.

“If what I understand the lifting of the sanctions will allow for, again, you allow Iran an opportunity in the global oil market that you’re denying your U.S. oil producers. I don’t think that’s right,” Senate Energy and Natural Resources Committee Chairwoman Sen. Lisa Murkowski, R-Alaska, told reporters.

“We will then be the only country that we sanction against oil exports. … I think it could build some momentum around the fact that we should look at our oil in a very different way,” Senate Foreign Relations Committee Chairman Sen. Bob Corker, R-Tenn., told reporters.

What they haven’t agreed on is a vehicle for pushing the issue. But for a topic that largely hadn’t been part of the national or political conscience until last year, the sheer number of options lawmakers are considering reflects how central the export ban has become to U.S. energy policy.

“I think it’s got a lot more momentum than what we even — I mean, even four months ago,” Rep. John Shimkus, R-Ill., told reporters. “I think you’ll see something in a couple months.”

That Republicans haven’t been able to find a place for the policy also shows how contentious the idea is, as it could act as a poison pill for must-pass legislation that needs Democratic support.

The Iran deal will ignite more of a conversation around exports, said Kevin Book, managing director with consulting firm ClearView Energy Partners LLC. Book said his group counted 59 Senate supporters — one shy of clearing a procedural hurdle for a full vote — for ending the ban in a “sunny day” scenario, and that the Iran development might help cement such backing. But it still might not be enough to get legislation passed, Book said.

“Even then, there may not be a vehicle — the Iran deal could spur enough partisan acrimony that it prevents lawmakers from coalescing around U.S. exports and, in any case, there’s plenty of acrimony already,” he said in an email.

Sen. John Hoeven, R-N.D., suggested that ending the ban is a matter of national security, so it could belong in the Defense Department authorization bill that currently is in a conference committee. The highway funding bill, which the House is scheduled to vote on this week and for which funding expires July 31, provides another chance.

“I think there’s many potential vehicles,” Hoeven told reporters.

A standalone bill remains viable. And Rep. Joe Barton, R-Texas, who is sponsoring legislation to nix the ban, said he has approached House Energy and Commerce Committee leaders about attaching the bill to a broad energy package the panel is expected to release in draft form this month.

Another avenue is to attach the measure to the expected resolution of disapproval of the entire Iran deal. But lawmakers weren’t ready to make that commitment Tuesday.

“To do all that would be more a messaging effort because that would be a messaging bill, but I’m not opposed to that,” Barton said.

“I have no idea what we’re going to do with the resolution of disapproval. None,” Murkowski said. “I haven’t even really thought about what it might look like or how it would be a possible vehicle for us.”

Debate over whether to scrap the export ban has been building on Capitol Hill for months. The House held a hearing on Barton’s bill last week, while Murkowski has been leading the conversation in the Senate since January 2014.

Murkowski said she was open to including crude oil exports on a sweeping energy package she plans to roll out this month as well as pushing ahead on a standalone measure. Rep. Ed Whitfield, the Energy and Power subcommittee chairman of the Energy and Commerce Committee, said the wide-ranging bill his panel was working on would be a “logical vehicle for a lot of things,” including crude exports.

“We could move a standalone bill, we could attach something on an appropriations bill of some kind or an omnibus bill, or we could work on something maybe the Senate is sending over here, so a lot of opportunities,” the Kentucky Republican told reporters.

While the U.S. currently exports a limited amount of crude oil to Canada, it is allowed to send refined petroleum products such as gasoline abroad. Advocates of ending the ban say that hurts U.S. production by not allowing companies to fetch the highest possible price. They also contend that domestic refineries aren’t equipped to handle the light sweet crude found in the nation’s shale regions.

“[T]he Iran deal further emphasizes our own inability to compete in a more open global market,” Frederick Lawrence, vice president of economics and international affairs with the Independent Petroleum Association of America, said in an email.

But supporters of keeping the ban, which include liberal Democrats and some refiners, contend ending it would raise prices.

“The ink is not even dry on the nuclear accord with Iran, and already the oil industry has immediately leapt to self-serving arguments about the need to sell their oil in the international marketplace. Ironically, most of the members of Congress advancing this argument will also likely condemn and oppose the deal with Iran,” Jay Hauck, executive director of the CRUDE Coalition, a group of refiners that opposes ending the ban, said in an email.