Some of the most vocal opponents of lifting the 1970s-era ban on U.S. crude oil exports are a handful of domestic refiners and their allies who claim that ending the ban will increase imports of foreign oil and threaten U.S. energy security. Ironically, these same refiners are actually the ones responsible for increasing foreign oil imports – proving that rhetoric and reality are often two different things.
Case in point: Several news stories have highlighted how refiners such as PBF, Monroe Energy/Delta Airlines, Philadelphia Energy Solutions and Valero (all of whom oppose crude oil exports) are displacing domestically produced crude oil with imported crude oil from the Middle East, Africa and Latin America. Despite decrying foreign imports, these refiners are actively choosing foreign oil above oil produced in America by Americans.
Here are a few examples:
Rhetoric: “We’re on the cusp of a historic opportunity – finally – to gain energy independence and security, and break through the grip of foreign oil cartels on the U.S. economy.” – CRUDE Coalition lobbyist Jeff Peck
REALITY: “U.S. imports of foreign oil are rising again after a long decline…Total U.S. crude imports rose 156,000 barrels a day in the week ended Oct. 16, helping push the combined stockpiles of crude oil and refined products to a weekly all-time high.” – Wall Street Journal, 10/26/15
Rhetoric: “In thinking about the merits of the export ban, we should consider one of its goals: To help this country achieve energy independence, and by ‘independence’ I mean the ability to meet our energy needs from sources within North America.” – Delta Airlines SVP of Fuel Operations Graeme Burnett
REALITY: “Delta’s refining unit, Monroe Energy, is set to buy as many as 5 million barrels of discounted Nigerian crude between now and mid August for its refinery in Trainer, Pa.” – Houston Chronicle 7/6/15
Rhetoric: “If we allow for the export of U.S. crude, we’ll have to import more oil from overseas and subject ourselves, once again, to an increasing degree of price volatility and higher global prices…All of this raises the question: Why repeal the law now? We are on the cusp of developing true energy independence, where we can produce – and refine – virtually all of our petroleum needs here at home.” – Monroe Energy CEO Jeffrey Warmann
REALITY: “Three companies that resuscitated failing oil refineries on the East Coast less than five years ago with the promise of cheap domestic oil are now looking overseas instead…Together, PBF, Philadelphia Energy Solutions Inc and Delta Airline’s Monroe Energy are expected to cut their Bakken crude intake to the lowest levels since 2013.” – Reuters, 11/3/15
Rhetoric: “…Exporting U.S. crude oil would force American refiners to import more foreign crude, barrel for barrel, often from unstable and unfriendly regimes – from Venezuela, from Libya, possibly even from Iran. That would foolishly reverse the trend of relying less on foreign oil, and move us away from energy security and independence.” – CRUDE Coalition spokesman Jay Hauck
REALITY: “Philadelphia Energy Solutions has already cut its purchases of oil from North Dakota by 80 percent, switching to imports from Nigeria, Chad and Azerbaijan.”– Business Insider 11/5/15
Rhetoric: “It makes more sense to keep crude oil here in the U.S. …[The ban] has significantly reduced American dependence on foreign oil…” – Valero spokesman Bill Day
REALITY: “Valero told investors and analysts that given current market conditions, it prefers importing medium-grade crudes from foreign suppliers instead of buying lighter, sweeter U.S. oil.” – Houston Chronicle, 10/8/15
Rhetoric: “Lifting the crude oil export ban ensures continued reliance on oil imports since exporting domestic crude directly threatens American energy independence and national security.” – Retired US Navy Cdr. Kirk S. Lippold
REALITY: “PBF’s Delaware City refinery imported about twice as much crude in July as in January, bringing in cargoes from Colombia and Peru, according to data from the U.S. Energy Information Administration. The company’s Paulsboro, New Jersey, refinery increased its imports by 50 percent in the same period.” – Reuters, 11/3/15
When domestic refiners decide to source their supplies overseas, it leaves U.S. workers and oil producers without a market to sell their product. Due to the current crude oil export ban, domestic refiners are the only customer (with few exceptions) to whom they are permitted to sell their product. These domestic refiners are not only cutting purchases of American crude oil in favor of foreign oil, but are actively lobbying to ensure American oil producers can’t sell it to anyone else by keeping the export ban in place. While these refiners are trying to have it both ways, domestic oil and natural gas jobs are lost, wells are shut-in, U.S. oil production declines and host communities across the country suffer.
It’s time to level the playing field.
Domestic refiners can buy crude oil on the open market from more than 34 countries and sell refined product to customers in more than 140 countries. Domestic producers and their employees should have the same opportunity to sell their product to allies and trading partners around the world – especially when some domestic refiners are shutting their doors to U.S. oil.