As Congress begins debate on the Iran nuclear agreement and prepares to adjourn for the August recess, both the United States Senate and the House of Representatives are beginning to consider legislation that will modernize our nation’s energy policy in a number of important areas. One area up for consideration is a change in the policy that currently prohibits the export of crude oil from the U.S.
This week, four major refiners — who collectively employ thousands of hard working Americans and own almost one quarter of all U.S. refining capacity – sent a letter to U.S. Representatives Fred Upton and Frank Pallone, the chairman and ranking member of the House Energy and Commerce Committee, and a letter to U.S. Senators Lisa Murkowski and Maria Cantwell, the chairman and ranking member of the Senate Energy and Natural Resources Committee, calling for the ban to be repealed.
This development, which follows support from a broad coalition of supply chain and business groups, trade associations and labor unions, is important since the most vocal supporters of maintaining the status quo has been a small group of refiners.
The letter, from the heads of refining at ExxonMobil, Chevron, BP, and Shell, states that:
“Allowing the export of U.S. crude oil will promote increased investment in domestic crude production and greater domestic supply for U.S. refiners. Further, it will allow for a healthy and vibrant global oil market which will not only benefit our refining sector but aid our economy, keep our skilled workers going strong and add to our tax revenues. Repealing the current artificial market constraints will have long term economic and energy security benefits.”
The letter also echoes the findings of economic studies and reports by the Government Accountability Office and the Brookings Institute that found U.S. consumers would benefit from lower gasoline prices and increased job prospects if the ban is lifted.
Here’s how E&E News reported this news:
“Top refining officials from the world’s largest oil companies are urging lawmakers to repeal the crude export ban, arguing that doing so will boost U.S. production and supply for refiners… The letter comes as export backers work to build up support for lifting the ban, which may start to see some legislative traction in the coming weeks and months as both chambers move energy packages.”
The call from these major refiners to lift the crude oil export ban comes at a time when U.S. refineries are operating at 95.5 percent utilization and U.S. crude oil in storage remains at record levels. This spring and summer U.S. commercial crude oil in storage, which does not include the government owned strategic petroleum reserve, reached almost 500 million barrels.
While on paper this situation may appear to be a positive for the economy, the challenge is that domestic crude oil has limited commercial outlets because we lack the refining capacity to process the increasing amounts of light sweet crude oil that we are producing and storage facilities are reaching capacity. This has caused the U.S. exploration and production sector – which includes many small- and mid-sized businesses – to idle nearly1000 drilling rigs over the past ten months. This has major impacts on jobs in the oil and gas industry, as well as in support industries along the supply chain. Estimates from the International Monetary Fund show that each active drilling rig supports 224 jobs, as noted in the following infographic:
Fortunately, these job creators and refiners join a growing coalition of think tanks, labor unions editorial boards and more than 100 Members of Congress from both parties, who understand that there is a quick policy fix that will benefit consumers, our economy and America’s geopolitical standing in the world.
The U.S. is the only major oil producing country in the world that bans the export of crude oil; it’s time for this policy to change and it’s great to have the support of U.S. refiners for this change.