Precedent Exists for Obama to Authorize Crude Oil Exports

Photographer: Daniel Acker

A catwalk at the top of crude oil storage tanks on a well site outside Watford City, North Dakota. Close

A catwalk at the top of crude oil storage tanks on a well site outside Watford City, North Dakota.

Photographer: Daniel Acker

A catwalk at the top of crude oil storage tanks on a well site outside Watford City, North Dakota.

Bloomberg BNA – There is sufficient precedent for President Barack Obama to approve crude oil exports using executive authority, according to Sen. Lisa Murkowski (R-Alaska), ranking member of the Senate Energy and Natural Resources Committee.

Murkowski released a committee minority staff report March 3 citing five instances in which limited oil exports have been authorized by presidential discretion during the administrations of former presidents Ronald Reagan, George H.W. Bush and Bill Clinton.

National Interest Test

“Presidents from both political parties have found limited exports to be in the national interest on multiple occasions,” according to the report.

The first authorization was made by Reagan in June 1985 allowing limited exports to Canada, the report said.

That was followed by Commerce Department approval in November 1985 of exports from Alaska's Cook Inlet production.

Reagan approved in December 1988 additional exports to Canada, specifically 50,000 barrels per day, from Alaska.

Bush issued a finding in October 1992 that exports of 25,000 barrels per day of California heavy-grade crude oil was in the national interest. A final rule was promulgated by the Commerce Department in 1995.

Clinton in April 1996 issued a finding that export of Alaska North Slope (ANS) crude oil would encourage production, boost the economy, create jobs and not raise prices on the West Coast or in Hawaii. The finding followed congressional passage of Pub. L. No. 104-58, which authorized ANS exports subject to a presidential determination.

A general ban on crude oil exports was enacted by Congress following the shortages and price spikes of the 1970s, but the president can authorize exports if it is in the national interest.

Refinery Mismatch

With new oil production in the Bakken oil field of North Dakota and in the Eagle Ford play in Texas, the energy industry is lobbying for Congress and the Obama administration to repeal the general ban.

The new oil production is a lighter grade oil while U.S. refineries are geared toward processing heavier grades, making a mismatch. The industry is seeking greater flexibility to trade supplies in overseas oil markets.

Murkowski has said she might introduce legislation if Obama doesn't act.

Consumer Price Concerns

A Senate Energy hearing in January revealed major concerns among senators and businesses over the impact on consumer prices, national security and trade.

Sen. Mary Landrieu (D-La.), the new Senate Energy chairman, expressed her support for lifting the ban at the hearing. Sen. Ron Wyden (D-Ore.), the former Energy chairman now leading the Senate Finance Committee, said his first priority is preventing consumer price spikes.

Harold Hamm, CEO of Continental Resources Inc., the largest producer in the Bakken, called for repealing the ban. Graeme Burnett, senior vice president of Delta Air Lines Inc., a major fuel consumer, said it is premature to repeal the ban.

The House has yet to conduct hearings or move legislation.

According to the Energy Information Administration, U.S. oil exports totaled 24.7 million barrels in 2012, all of it going to Canada.

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