Congress probably will consider loosening restrictions on U.S. oil exports, though a push by industry to sell more crude overseas will be resisted by members concerned about the impact on gasoline prices, lawmakers said.
Senator Lisa Murkowski, the top Republican on the Senate Energy and Natural Resources Committee, believes the debate on oil exports will happen “sooner rather than later,” according to Robert Dillon, a spokesman for the Alaska lawmaker.
“It’s something we are looking at,” Dillon said.
The chairman of the committee, Senator Ron Wyden, an Oregon Democrat, agrees the debate is coming though he would need to see benefits to consumers before supporting such a move, said spokesman Keith Chu in an e-mail.
The American Petroleum Institute is developing the “necessary legal analysis” and may “highlight potential violations” of global trade rules in support of natural gas and oil exports, according to an internal planning document obtained by Bloomberg News.
U.S. oil production is at its highest point in more than two decades as technological advances allow drillers to coax crude from shale rock formations.
The prospect of selling U.S. oil to other nations would be a tough domestic political challenge at a time when U.S. consumers are struggling with high energy prices, said Daniel J. Weiss, director of climate strategy at the Center for American Progress, a Washington-based group that says it promotes progressive policies.
U.S. consumers were forced to spend more on a gallon of gasoline last year than at any time since the mid-1970s, after adjusting for inflation, he said. The national average price for a gallon of regular unleaded gasoline was $3.23 on Nov. 5, compared with $3.46 per gallon a year ago, according to data collected by the American Automobile Association.
“It’s hard to imagine many congresspeople voting to export such a vital commodity to other countries,” Weiss said.
Democratic Representative Gene Green, whose Houston-based district is home to energy companies including pipeline company Kinder Morgan Inc. (KMI), said it doesn’t make sense to remove restrictions on sales overseas while the U.S. imports about 40 percent of its oil and petroleum products.
“It’s something maybe in the future, but right now we’re not really self-sufficient,” Green, a member of the House Energy and Commerce Committee, said in an interview. “I’d be hesitant to do it. We should take care of our own needs first.”
Dillon declined to say whether Murkowski supports more oil exports. She is supportive of removing constraints on exports of liquefied natural gas. The Energy Department has approved four applications for terminals to export gas to countries that don’t have a free-trade agreement with the U.S. Another 20 applications are under review.
Wyden “is aware our country will have a debate over exporting crude oil in the near future,” Chu said. “He’s willing to consider all policies and all options, so long as he sees evidence that those policies will result in clear benefits to the American consumer.”
The Republican-led House Energy and Commerce Committee may also look at the issue of removing restrictions on oil exports, though it doesn’t have any hearings scheduled on the topic.
“The committee is continuing to examine the growing energy boom and re-evaluate policies that are based on scarcity,” Charlotte Baker, a Republican spokeswoman for the panel, said in an e-mail.
Harold Hamm, the chief executive officer of Oklahoma City-based drilling company Continental Resources Inc. (CLR), has said the U.S. may need to remove restrictions on exports to ensure that the domestic energy boom continues. Gluts of oil in regional markets lower prices and may discourage drillers to continue exploration, he said.
Producers that want to export now must apply for a license from the U.S. Commerce Department, which weighs whether the shipments are “consistent with the national interest.”
From 2003 to 2012, the U.S. exported an average of 35,000 barrels a day of crude oil, 98 percent of which went to Canada. Exports have increased recently, to 67,000 barrels in 2012, according to the Energy Information Administration, which tracks and analyzes U.S. energy data.
That’s still just a fraction of total U.S. production, which hit 7.5 million barrels a day in August, according to the latest figures from the EIA. That same month, the U.S. imported more than 8 million barrels of crude.
Proponents of easing the process of selling oil overseas say it will encourage more U.S. production, which has increased to its highest level in more than two decades. Hydraulic fracturing and horizontal drilling have given companies like Continental, the most active driller in the Bakken field, access to reserves trapped in shale rock formations.
The International Energy Agency in Paris predicted last year that the U.S. would overtake Saudi Arabia by 2020 as the world’s largest oil producer.
Without exports, the drilling boom may wane, said Kevin Book, managing director of ClearView Energy Partners LLC, a Washington-based consulting group.
Sourced form Fuel Fix