Ending the U.S. oil export ban gets praised and pilloried
U.S. oil and gas producers are hailing the lifting of a 40-year-old ban on American oil exports as a lifeline at a time when their sector is being decimated by sliding prices and oversupply. The move is part of a grand $1.1 trillion budget deal between the Obama White House and the Republican-controlled Congress, which will avoid a government shutdown.
However, environmental and consumer groups denounced the move, which they say will result in an dramatic increase of oil use worldwide, an acceleration of global warming and higher prices for U.S. consumers. A final vote is expected by the end of the week.
The export ban was put in place in the 1970s to counter OPEC's cutoff of oil to the U.S. in reprisal for American support of Israel. For decades after the embargo, U.S. oil production declined as investment waned and existing wells matured. But in the last several years, thanks to the development of new drilling technology, the U.S. oil and gas industry has experienced a major production rebound.
While the use of hydraulic fracturing, or "fracking," remains controversial due to environmental concerns, American oil and gas production has skyrocketed. The nation's daily oil production spiked from 5 million barrels a day in 2005 to 9 million a day this year.
According to the U.S. Energy Information Agency, the U.S. imported 9 million barrels of oil and petroleum products a day while exporting 4 million barrels a day in 2014. About a third of those imports came from OPEC-linked nations.
Under the conditions of the export ban oil, companies could apply for exemptions. The quality of U.S. oil is generally characterized as a "light and sweet crude with a lower sulfur content," which commands a higher price on the world market
Back in 2012 the U.S., for the first time since 1949, actually exported more refined gasoline, heating oil and diesel fuel than it imported.
In a policy statement, the American Petroleum Institute claimed that lifting the ban on exports would benefit consumers and produce tens of thousands of jobs. The trade group predicted that ending the ban would set the stage for the U.S. "to become the world's largest oil producer," which the API asserted will create new "economic opportunities across the country."
"It is a dirty deal for dirty energy right after 190 nations, including the U.S., committed to do something to address climate change," said Jeff Tittel, executive director of the New Jersey Sierra Club. "Oil companies first said they needed to get to drill so the U.S. could be energy independent, and now they're going to export it to a world market. Ultimately the U.S. consumer will pay a higher price, and the planet will have more pollution."
In a statement, nonprofit environmental and consumer advocacy group Public Citizen blasted the deal as a "windfall to big oil" that will pay out $170 billion over the next decade "at a time we should be slashing carbon pollution and moving toward energy independence."
Shawn Bennett with the Ohio Oil and Gas Industry Association told CBS MoneyWatch that the sustained decline in global oil prices has been a major blow to the Buckeye State's energy sector, which had seen a major expansion, thanks to fracking. Bennett said lifting the export ban would be a boon to the domestic energy production sector while also helping the U.S. "exert it's geopolitical potential as a world leader."
In 2013, U.S. Energy Secretary Ernest Moniz raised the possibility with reporters that both the nation's Strategic Petroleum Reserve and the Oil Export Ban needed a reexamination "in the context of what is now an energy world that is no longer like the 1970s." Yet, until very recently, President Obama stood by his commitment to keep the oil export ban in place. Several weeks ago, Obama won applause from environmentalists when he opted to pull the plug on the controversial Keystone Pipeline.
According to White House spokesman Josh Earnest, the grand budget bargain that lifted the export ban was a good deal for Democrats because the legislation will keep funding for Planned Parenthood in place, prevent curbs to Dodd-Frank financial reform efforts and permit Syrian refugees to enter the U.S.