Senate Energy Committee Chairman Ron Wyden said the U.S. must weigh the costs to consumers before ending the 40-year ban on crude oil exports and he predicted a prolonged debate.
“It’s fair to say this conversation is not going to be resolved any time in the next few weeks,” Wyden, an Oregon Democrat and head of the Senate Energy and Natural Resources Committee, said at a hearing today. It was the first hearing on the issue in 25 years, he said.
Harold Hamm, chairman of Oklahoma City-based Continental Resources Inc. (CLR), told the panel that ending the limits will cut gasoline prices. Graeme Burnett, senior vice president of Delta Air Lines Inc., said ending restrictions will raise fuel costs.
The differences between oil producers and users suggest a lobbying battle ahead as lawmakers reconsider the export ban enacted after the Arab oil embargo in the 1970s. Senator Lisa Murkowski of Alaska, the committee’s top Republican, opened the debate by calling to lift the ban in a Jan. 7 speech.
Murkowski said today she didn’t expect President Barack Obama’s administration to lift the ban in coming months, and she doesn’t plan to introduce legislation any time soon.
“What I am hoping for is that we can advance this discussion so that it is clearly understood,” she said.
Senator Mary Landrieu of Louisiana, the No. 2 Democrat on the panel, said new technologies added production and helped companies in her state. She didn’t take a position on lifting the ban. Landrieu is set to take over the panel when Wyden becomes chairman of the Senate Finance Committee.
Republican Senator Rob Portman of Ohio said as a first step he would like to consider a deal with Mexico to offer U.S. light, sweet crude in return for its heavier grade that most American refineries are geared to handle.
Energy Secretary Ernest Moniz in December said export limits and other policies from the 1970s may need review. A 1975 law, adopted after the Arab oil embargo, prohibits almost all U.S. crude from being shipped abroad, though exports of refined goods such as gasoline and diesel fuel are permitted.
Recent advances in drilling techniques, such as hydraulic fracturing, have unleashed vast reserves in places like North Dakota’s Bakken shale formation. U.S. crude production increased 28 percent, to 2.4 billion barrels annually, from 2007 through 2012, according to the Energy Department.
“We believe strongly that the ban on U.S. crude oil exports is good for consumers,” Burnett, of Atlanta-based Delta, told the committee. If it is lifted, producers in the Middle East would curb output to boost global prices, resulting in higher costs for gasoline and airline tickets, he said.
“We need to lift this restriction sooner rather than later,” said Hamm, whose company is the largest leaseholder in the Bakken oil basin. He also is chairman of the Domestic Energy Producers Alliance, a group of companies whose drilling and refining operations aren’t owned by the same parent.
“We are entering a new era of energy abundance in America and the world,” he said. “Lower prices are only brought about by increased supply” and greater competition, he said.
The American Petroleum Institute, the Washington-based lobby for oil and gas producers, favors easing restrictions. Refiners who may have to pay higher prices for crude, such as Valero Energy Corp. (VLO) of San Antonio, oppose the measure.
“This is going to be in the to-be-continued department,” Wyden told the group before adjourning the hearing.
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