POLITICS: PennAve

Debate grows over whether U.S. should end decades-long ban on oil exports

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PennAve,Energy and Environment,Zack Colman,Mary Landrieu,Oil,Ernest Moniz

Growing debate on whether the U.S. should end a restriction on crude oil exports is setting the table for potential policy changes through Congress or the White House, energy analysts said Monday.

The U.S. has maintained a ban on exporting crude since the 1970s — when the Arab oil embargo crippled supplies and sent prices skyward — save for a small amount that flows north to Canada. But that policy is getting another look as the nation is flush with oil resulting from the shale energy boom.

Though some pieces are falling into place to make a legislative end to the ban more likely -- such as the possibility of oil-patch Sen. Mary Landrieu, D-La., becoming chairwoman of the Senate Energy and Natural Resources Committee -- analysts said the debate is likely to span several years. And some said the call ultimately might come from the Obama administration.

"This discussion is pretty recent and it takes some time to educate the public and policymakers," said Margo Thorning, senior vice president and chief economist with the American Council for Capital Formation.

Daniel J. Weiss, who heads the energy and climate program at the left-leaning think tank Center for American Progress, said the compressed legislative calendar, shifting leadership on the Senate Energy Committee and upcoming midterm elections would make the "controversial" proposal unlikely to get a Senate floor vote this year.

"It is possible to imagine the passage of such a bill from a congressional committee or two, but it is difficult to see how it winds its way through the entire legislative process in 2014 when the process has yet to begin," he said.

Still, those who want to end the ban said even passing bills out of committee would be seen as a victory given the relatively nascent dialogue on the subject.

"I do think there is a lot of work that needs to be done to change the mindset regarding oil exports. It seems likely that any change on this front would take place at the administrative level," said Matt Letourneau, a spokesman with the U.S. Chamber of Commerce's Institute for 21st Century Energy. "There certainly would be the potential for Congress, and in particular [the Senate Energy and Natural Resources Committee], to start laying an intellectual and policy foundation on crude exports."

On the administration front, Energy Secretary Ernest Moniz raised the issue last month, saying the policy could be revisited. And Sen. Lisa Murkowski, the top Republican on the Senate Energy panel, will discuss the topic Tuesday during a Washington speech at the Brookings Institution.

"What you will hear is a push for reexamination of our policies behind our energy production and how we advance it," she told the Washington Examiner.

The Alaska Republican is expected to advocate ending the ban — and she soon could have a like-minded partner atop the Energy Committee in Landrieu, who is expected to take the gavel from current Chairman Sen. Ron Wyden, D-Ore. Wyden is the likely replacement for Sen. Max Baucus, D-Mont., as Finance Committee chairman if the Senate confirms Baucus' appointment as ambassador to China.

"It's important for our policies to be updated so, yes, it needs to be looked at." Landrieu told reporters Monday. "The Department of Energy should look at it, but maybe Congress needs to push a little bit. But I think the Department of Energy is in pretty good hands right now."

Landrieu noted, however, that "Wyden is still the chair."

Wyden is taking a wait-and-see approach on the export ban, majority committee spokeswoman Samantha Offerdahl wrote in an email.

"[I]t’s clear that a larger conversation has begun on whether exporting crude oil is in the national interest and it’s a conversation likely to continue into next year. Senator Wyden is particularly interested in how consumers would be affected by any change in export policy," she said.

Proponents of the export ban argue that the U.S. supply of oil has helped depress domestic prices despite oil prices being determined on the world market.

"[I]t is keeping U.S. gasoline prices down a tad, as the excess capacity means it’s cheaper for U.S. refiners to access select U.S. landlocked crude," said Tyson Slocum, director of consumer advocacy group Public Citizen's energy program.

But the American Petroleum Institute says exports are necessary because U.S. refineries aren't equipped to handle the light, sweet crude that's a product of the shale boom.

While Wyden has been traditionally resistant to measures that expand oil and gas exports, Landrieu's constituents, which include many in the oil and gas sector, would likely be more supportive.

"Wyden has been strongly anti-energy export for a very long time, certainly beyond the duration of the tenure of his chair," said Michael Whatley, executive vice president of the Consumers Energy Alliance, a collection of oil and energy-consuming businesses. "Certainly the atmosphere on the committee is going to be better with Mary in the chair."

A Senate GOP aide said the new committee makeup would be conducive to advancing legislation, as some centrist Democrats likely would back ending the ban.

But it would probably be met with opposition from Senate Majority Leader Harry Reid, D-Nev., and other Democrats.

"At the end of the day, the floor is still Harry Reid's floor," Whatley said.

Joel Darmstadter, a senior fellow with think tank Resources for the Future, agreed, saying Reid might be "more receptive to the populist segment of the Senate," as he mentioned Wyden and Sen. Ed Markey, D-Mass.

Markey already has weighed in on the issue, saying that ending the ban would maintain reliance on foreign oil.

Darmstadter, who supports ending the export ban, said that concern might make it difficult for President Obama to approve a policy change. After decades of striving for independence from less friendly nations, the U.S. is conceivably close to that goal, he noted.

"It may be exploited in a way that he would feel damage to his reputation in protecting U.S. interests," he said. "It might stir the right political passions — right or wrong, depending on what way you're looking at this."

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