Oil producers form new group to lobby to lift crude export ban


Oil producers form new group to lobby to lift crude export ban


HOUSTON (Bloomberg) -- Oil producers are forming a coalition dedicated to ending the four-decade U.S. ban on crude exports, signaling a more serious turn in their push to sell to overseas customers.

The Producers for American Crude Exports includes ConocoPhillips, along with at least 13 other companies, company spokesman Daren Beaudo said in a statement. Hess, Marathon Oil, and Continental Resources Inc. are also in the group, according to a disclosure statement filed to Congress.

As U.S. oil production increases to its highest point in three decades, advocates for exports say the ban is anachronistic and they point to studies showing positive effects from allowing exports, including more production in the U.S. and cheaper gasoline prices.

Even so, energy analysts and lobbyists said success for the effort isn’t certain in Washington, where the focus has long been on how to cut ties to overseas oil tyrants.

“Every politician running for dog catcher to president over the last 30 years has told the American people that all of our problems would be solved if we achieved ‘energy independence,’” said Jeff Navin, a former deputy chief of staff at the Energy Department under President Barack Obama. “The politics of this are extremely tough, and you’ve seen free market Republicans in oil patch states hesitant to embrace a full scale policy of exports.”

Hoeven Reluctant

Republican Senator John Hoeven from North Dakota, where oil production now tops 1 million barrels a day, has said he’d need more assurance that exports wouldn’t raise gas prices before he backs an end to export restrictions.

Voters may blame lawmakers for a subsequent rise in pump prices even if there’s no connection to removing the export ban, said Stephen Brown, a lobbyist for Tesoro Corp., a refiner based in San Antonio. Constituents “will ultimately have to signal acceptance” before lawmakers vote to end the ban.

Tesoro Chief Executive Officer Greg Goff said in a speech this month in Washington that the lawmakers should take a “holistic” look at policies relating to oil markets. Congress also should lift the Jones Act, which requires U.S. made ships with American crews to carry good between domestic ports, as it considers ending the export ban. Refiners say the Jones Act raises transportation costs.

Details on the coalition was previously reported by the Houston Chronicle blog FuelFix.

‘Is Vital’

“The ability to export crude oil from the United States is vital to the country’s economic growth and national security, job creation, and strengthening our competitive position in the global marketplace,” Beaudo said in a statement.

There are some exceptions to the ban. Sales to Canada are allowed and reached their highest point in July in decades. Producers say they need new markets or face a domestic glut of oil that could halt the U.S. energy boom.

There are some signs of momentum for lifting restrictions.

The Government Accountability Office, Congress’s investigative arm, reviewed other analyses in a report this week, concluding that exports could lower pump prices by as much as 13 cents a gallon even as they raise crude oil prices in the U.S.

That’s so because gasoline is pegged to a global benchmark known as Brent rather than the West Texas Intermediate, the U.S. benchmark, price, GAO said.

Gasoline Prices

Last month, the Brookings Institution, a Washington policy group, released an analysis showing that exports would lower gasoline prices by boosting global supplies and lower Brent prices.

Lawrence Summers, President Barack Obama’s former top economic adviser, gave a full-throated endorsement of lifting the ban at a speech at Brookings on the day the report was released.

Summers identified one potential losers, oil refiners who now can sell their processed products overseas and who may see input costs go up if oil prices in the U.S. rise.

Four refiners including PBF Energy in Parsippany, New Jersey, have formed a coalition called the Consumers and Refiners United for Domestic Energy to keep the export ban.

“Those favoring exports can trot out economists and studies and discuss Brent and WTI at length,” said Jeffrey Peck, a lobbyist and spokesman for the group. “But voters know what is right in their gut. And what they know is that if the price of crude oil is lower in the United States, the price of gasoline will be lower in the United States. No one knows exactly what will happen to gas prices if the government decides to allow crude oil exports.”

Exxon Mobil

In January, when companies including Exxon Mobil first began to talk openly about ending the export ban, a flood of oil from U.S. producers had driven down prices at the pump, while global prices remained level.

Both sides of the debate are awaiting an analysis from the U.S. Energy Information Administration, which collects and analyzes energy data, on the tie between U.S. gasoline prices and global oil markets.

Robert Dillon, a spokesman for Senator Lisa Murkowski of Alaska, said the Alaska Republican plans to continue to push for removing the ban next year. If Republicans win the majority, Murkowski will be the chairman of the Senate Energy and Natural Resources Committee. Dillon said Murkowski probably won’t immediately push a bill to end the ban.

“There is an education going on both with members of Congress and the public,” he said.

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