Oil industry starts push to end ban on exports of crude oil

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The oil and gas industry is seizing on recent comments by Energy Secretary Ernest Moniz to push for an end to the United States' 40-year-old ban on crude oil exports.

The American Petroleum Institute says the U.S. energy boom has made the ban irrelevant, citing Energy Information Administration projections this week that domestic oil production would hit a near-record 9.5 million barrels per day by 2016.

"It is undeniable that the American energy revolution has rendered our energy export policies obsolete," said Erik Milito, API's upstream director.

The comments come after Moniz suggested that the U.S. should "relook" at the ban, which was imposed in response to the 1970s Arab oil embargo, which caused worldwide shortages.

"There are lots of issues in the energy space that deserve some new analysis and examination in the context of what is now an energy world that is no longer like the 1970s," Moniz said at the Platts Global Energy Outlook Forum in New York.

Hydraulic fracturing, or fracking, has sparked the boom in domestic energy production. The technology involves blasting tight rock formations with a cocktail of water, sand and chemicals to access previously hard-to-reach hydrocarbons.

Although the practice has prompted concerns of water pollution, it has pumped out loads of new energy resources. That, with increasingly fuel-efficient cars and the proliferation of alternative-fuel vehicles, has helped curtail imports — the U.S. in October produced more oil than it imported for the first time in 25 years.

The Obama administration has touted that development as a sign of economic progress.

"This year is going to be the first in a very long time we're producing more oil and gas than we're importing. That's a very big deal," President Obama said at his press conference Friday.

The oil industry, starting with recent calls from Exxon Mobil, sees a window to press its case.

The industry contends the U.S. has more oil than it needs and that producers can't move the light, sweet crude to the proper U.S. refineries without significant regulatory changes and infrastructure upgrades — options that, for now, appear heavier lifts than ending the export ban.

Milito said the administration can act unilaterally in determining that exports are in the national interest. He also said Congress could end the export ban.

The potential Senate-musical-chairs/article/2540956">ascendancy of oil-friendly Sen. Mary Landrieu, D-La., to chairman of the Senate Energy and Natural Resources Committee could smooth a path for legislation. She is poised to take the gavel if current Chairman Ron Wyden, D-Ore., slides into the top post on the Finance Committee to replace Max Baucus, D-Ore., whom Obama has nominated to become the next ambassador to China.

Milito said that "it's too early to speculate" about Landrieu's position and impact, though he noted that she has been supportive of oil industry goals in the past. Still, if Landrieu is named head of the committee, that would put her in a tandem with ranking member Sen. Lisa Murkowski, R-Alaska, an oil industry supporter who is scheduled to deliver a speech on energy exports at the Brookings Institution next month.

Regardless of Landrieu's role, removing the ban certainly would face hurdles in the Senate.

Sen. Robert Menendez, D-N.J., chairman of the Senate Foreign Relations Committee, sent a letter to Obama this week opposing an end to the ban, suggesting it would create gasoline price spikes at home.

And Sen. Ed Markey, D-Mass., said that sending crude oil abroad would hinder U.S. energy security, saying that doing so would increase reliance on Middle East imports -- which the ban was meant to deflect in the first place.

“The growing chorus from the oil industry to change longstanding U.S. law to permit the export of American crude oil is a disturbing trend. There can be no doubt that this is now a coordinated attack by the oil industry on the U.S. law that bars exports of crude oil from the United States," Markey said last week.

Exporting crude also could undercut recent gains in refined petroleum products, which the White House credited with propelling an upward revision of gross domestic product estimates for the second quarter.

Charles Drevna, president of the American Fuel and Petrochemical Manufacturers, said he's unsure whether ending the export ban would benefit the entire refinery industry, but he said his organization would support removing barriers to free trade, such as the ban.

"One needs to be really consistent in their positioning," he said. "Our position is crude should be able to find their highest value."

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