NCPA - National Center for Policy Analysis

Repeal Ban on Oil Exports

October 13, 2015

After watching the price of oil and the size of their profits plunge, a dozen top executives from some of the nation's largest oil exploration companies flew to Washington late last winter on an urgent mission: push Congress and the White House to allow unlimited exports of American crude oil.

Now, their long-shot lobbying effort to repeal the 40-year-old export ban has gathered considerable momentum. Approval by the House is expected in the coming weeks, and two Senate committees have already endorsed the idea.

To industry executives, the swift progress validates the inherent strength of their argument that eliminating the export ban will create jobs and drive down gasoline prices by encouraging more domestic crude oil production.

The export ban has been a cornerstone of American energy policy since 1975, when Congress directed President Gerald R. Ford to largely prohibit the export of oil as "consistent with the national interest," although a few broad exemptions, like exports to Canada, were allowed.

But the calculus has changed since domestic oil production nearly doubled after 2008 because of the sharp increase in drilling and hydraulic fracturing in shale fields across the United States, slashing the country's dependence on imports from OPEC and producing a glut of several types of crude oil.

Lined up against the oil companies are the United Steelworkers union, which represents refinery workers, and environmental groups. Also against lifting the ban are a handful of refiners who benefit from the glut in domestic supplies, which lowers the price of their main raw material for producing gasoline, diesel and jet fuel.

Even if the legislation does not pass Congress, the oil industry will have increased leverage on the Obama administration to further loosen the ban -- as the Commerce Department has the power administratively to make more adjustments.

Source: Eric Lipton, et al., "Oil Industry Gaining in Push for Repeal of U.S. Ban on Petroleum Exports," New York Times, October 5, 2015.

 

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