A change in circumstances sometimes necessitates a change in practice.
That is the case with the crude oil export ban of 1975. Congress approved the ban following the Arab oil embargo against the United States, but crude production in the U.S. has soared in recent years because of activity in the Lower 48.
In fact, production has risen so much that the nation’s refineries may run out of capacity to process it. When that happens, the export ban would prevent that oil from being sold to other nations, except in narrow circumstances — primarily to Canada — as allowed by the Department of Commerce.
The relevance of the 40-year-old ban in today’s energy world needs to be reviewed. Should it be scrapped? Should it be modified? The public and the nation’s political leaders, including President Obama, should be open to a review.
Alaska Sen. Lisa Murkowski, the leading Republican on the Senate Energy and Natural Resources Committee, last week made a forceful case for lifting the ban. The senator spoke Tuesday at the Brookings Institution, a nonprofit public policy organization in Washington.
“I am calling for ending the prohibition on crude-oil and condensate exports,” she said. “The current system is inefficient and may lead to supply disruptions that we can ill afford.”
Her remarks were accompanied by a white paper, which she produced with her staff, that makes a strong argument for lifting the ban.
Sen. Murkowski and others, including a few Senate Democrats, argue that increasing production by lifting the export ban would force down the international benchmark oil price by putting more oil on the market, thereby lowering the price of gasoline.
Keeping the ban in place, the document says, may actually “increase prices, create market distortions, lead to the misallocation of capital, and have a deleterious impact on job creation.”
And on the point about oil producers eventually having nowhere to take their oil when refineries reach capacity, the document argues that prices and U.S. reliance on oil imports could increase. It says the International Energy Agency warns that “not lifting the ban will create a glut in North America and threaten production.”
This isn’t about benefiting Alaska oil production. Congress lifted the ban on the export of Alaska North Slope crude in 1995. That move, supported by President Clinton, was seen as bringing in $180 million annually in additional federal tax revenue, raising oil production and increasing the number of oil industry jobs.
Alaska exported 95.5 million barrels of crude from 1996 to 2004 but hasn’t exported any since then, according to the U.S. Energy Information Administration. Most North Slope oil nowadays is sent to refineries in California, Hawaii and Washington, with some of it also processed here in Alaska.
No, this is an issue about benefiting U.S. consumers and trying to ensure that the United States remains a key player in an energy-hungry world in which other nations are going to get their energy from somewhere else if not from the U.S.
Messing with the export ban is politically risky, however, since opponents of elected officials will almost certainly claim that removing or changing the ban will raise gasoline prices rather than lower them. It’s a sure-fire way to win points in an election year in which the nation is still trying to recover from a deep recession.
The ban can be lifted simply by presidential order. Failing that, it can be done by Congress, and that’s what Sen. Murkowski said she intends to pursue if President Obama doesn’t act.
Changing or eliminating the export ban would be a major development. But it’s time to take a serious look.
— Fairbanks Daily News-Miner, Jan. 11