November 2015, Vol. 242, No. 11
Editor's Notebook
Ending Ban on Oil Exports Looms as Biggest Hurdle for Oil Industry
As President Obama smugly twiddles his thumbs and decides when he’ll put Keystone out of its misery, sides are being taken, mostly along political lines, in the real debate that will decide the fate of the domestic oil industry: ending the outdated 1975 ban on crude oil exports.
Obama, of course, sees no need to lift the ban, though he says he might reconsider IF the oil industry gives up its tax breaks. As one expected, Hillary Clinton, presumptive Democratic nominee for president, also opposes ending the ban.
Refineries and various business groups favor the ban, fearing its end would raise their costs. The environmental lobby, with its deep pockets, has become increasingly entrenched in the administration and fights anything that even hints of supporting fossil fuels.
On Capitol Hill, the GOP-dominated House has approved a bill ending the ban. A Senate panel endorsing exports passed a bill but not before several Democratic members voiced skepticism. Their support is contingent on receiving serious concessions from their GOP colleagues. So, let the horse trading begin, because without an acceptable compromise, Obama will quickly issue a veto which Congress won’t be able to override.
Here’s an example of the rancor over lifting the ban: GOP criticism of the nuclear deal that puts Iranian crude back on the market which will apply even more pressure on U.S. producers. A GOP-dominated Senate panel added an amendment requiring that Iran use the revenue to compensate terrorism victims who won cases in U.S. courts against Iran. That will kill the bill. The panel killed suggestions by Sen. Robert Menendez (D-NJ) that would delay repeal pending a study of potential job losses from the policy change, and would block exports until the U.S. determines it has produced enough crude to satisfy domestic demand.
“I think Americans would be appalled to know that we’re considering exporting U.S. oil at a time that we’re still reliant on foreign oil — to know that instead of investing in U.S. refineries and creating good-paying jobs at home, we are considering a policy that would send those jobs to refineries overseas,” he said.
That may satisfy the anti-fossil fuel lobby but the comments lack logic. Some U.S. refineries need heavy crude not produced here. And, as Sen. Richard Shelby (R-AL) said, “28% of U.S. refining capacity is owned by foreign interests who will always import heavy sour oil produced and imported from their own country.”
Heidi Heitkamp (D-ND) wants to protect her state from the economic destruction endangering the Bakken Shale. Since we export refined products such as gasoline and diesel, why can’t unprocessed crude be afforded equal treatment? How does exporting refined product help control prices at the pump?
Most experts including the EIA agree that exports would raise U.S. crude prices modestly though gasoline prices would be the same or slightly lower. Some Democrats want to combine exports with other energy provisions, such as renewable energy programs in the fight against climate change, ending the billions in tax incentives for the oil industry or imposing a new per-barrel production tax to fund highways and other infrastructure. Sens. Joe Donnelly (D-IN) and Jon Tester (D-MT) want to protect refinery jobs as part of a compromise; Donnelly suggests mandating U.S. steel for any pipeline that facilitates crude exports.
If domestic crude is too valuable to export, and we want to break our dependence on foreign oil as Menendez suggests, stop appeasing the fossil-fuel haters by subjecting the industry to every conceivable roadblock. If oil is so important to our economy, why continue to let it be sold for less than the price of water? Unless we keep the domestic industry at work, our production will dwindle, forcing us to import more instead of less, raising prices at the pump, and costing tens of thousands of high-paying jobs.
The industry is readying TV ads for the export bill. Why not air an ad explaining why domestic production keeps gas prices low? That the public gets. Speaking of TV, I saw a rather serendipitous message after writing this that spoke of that evening’s Share-a-Thon. Who would use my name so cavalierly? I tuned in and saw this was Jimmy Swaggart’s annual fundraiser. Now whether he’s praying, crying, singing or doing whatever, the rev has always been my favorite TV preacher.
As I watched, I wondered how much would he charge to say a prayer for our industry, and that government does the right thing?
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