Former Obama Officials Say Oil Export Ban Hurts U.S. Credibility

Photographer: Diana Haronis/Mobile Moment

Two former Obama administration officials said a four-decade-old ban on oil exports limits U.S. geopolitical influence and makes it harder to get other nations to embrace free trade.

The issue of the ban “arose constantly” in negotiations with other countries, including when the U.S. sought support for sanctions on Iran’s oil production to halt its nuclear ambitions, said Carlos Pascual, a former top energy envoy at the U.S. State Department.

“It’s those kinds of restrictions that in the end affect American credibility, and in the moment when we have to put through an important policy, makes it much more difficult to negotiate,” Pascual said at a Senate Energy and Natural Resources Committee hearing Thursday called to build support for ending the ban in place since the 1970s Arab oil embargo.

Despite a lobbying push by drillers, and steep job losses in the oil fields tied to a plunge in crude prices, there’s been no significant effort in Congress to lift the ban. Some oil refiners, who benefit from low prices, oppose ending the ban.

Pascual said in the drive for international support of penalties on Iran, Indian and Turkish officials questioned where they’d get crude to replace the supplies threatened by sanctions.

Murkowski Bill

The U.S. succeeded in showing both governments why it was in their national interest to diversify their sources beyond Iran, but “it was not an easy negotiation,” said Pascual, now senior vice president for energy and international affairs at IHS Inc., a consultancy, and a former ambassador to Mexico and Ukraine.

Senator Lisa Murkowski, an Alaska Republican and committee chairman, is writing legislation to end the ban as a way to encourage continued oil development in the U.S. as prices fall and companies begin to cut back.

While proponents of ending the export restrictions say doing so will lower U.S. gasoline prices by adding to the global oil supplies, the hearing largely focused on the effect the ban has on energy geopolitics.

Ending the ban “is beneficial to the markets for efficiency, for pricing and also in sending a message of support on the importance of free trade” said Elizabeth Rosenberg, a former senior adviser at the Treasury Department under President Barack Obama.

Rosenberg is the director of the energy, economics and security program at the Center for a New American Security, a Washington-based group that examines national security issues.

Jeff Warmann, the chief executive officer of Monroe Energy LLC, the refining arm of Delta Air Lines Inc., said lawmakers should leave the restrictions in place.

The drop in fuel prices as U.S. production has increased has provided a “jolt to the economy,” Warmann said.

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