Energy secretary stays coy on oil exports
The oil industry still hasn’t made a compelling economic case for exporting U.S. crude, Energy Secretary Ernest Moniz said Thursday.
Moniz’s comments — in a conversation with reporters on the sidelines of the IHS Energy CERAWeek conference in Houston — represented a doubling down on the skepticism he expressed at the same summit last year.
“In a situation where we still import 7 million barrels of crude oil per day, I don’t think an overly compelling argument has been made on the basis of pragmatic economics,” Moniz said.
The Commerce Department — not the Energy Department that Moniz heads — is in the driver’s seat when it comes to formal decisions about oil exports. And Moniz stressed that he was not making “a statement in support of or against the idea of exports.”
But his observation reflects the steep hurdles still facing U.S. oil producers who are trying to convince the Obama administration and Congress that 1970sera restrictions on selling crude overseas are outdated amid soaring domestic production.
The existing ban only applies to raw, unprocessed crude — not refined petroleum products such as gasoline — and there are exceptions allowing exports of some California crude and Alaskan oil as well as shipments to Canada. The Commerce Department’s Bureau of Industry and Security also has clarified that the ultralight oil known as condensate qualifies for export as a refined petroleum product once it has been distilled — providing another path for some U.S. oil outside the country.
Oil producers clamoring for exports acknowledge that imports are here to stay — even though the amounts are down in the face of big climbs in domestic production — because U.S. refiners still draw heavy crude from other countries. But they argue that if allowed, the United States could export its higher-quality light, lowsulfur oil while importing heavy crudes that are a better match for many domestic refineries.
ConocoPhillips CEO Ryan Lance has noted that the United States simultaneously imports and exports gasoline and other refined petroleum products.
Refiners that are wary of oil exports — or oppose them outright — counter that they can make changes to consume more light U.S. crude.
And they argue that if the government greenlights exports, it could mean some U.S. refineries will pay more for U.S. crude than competitors in Europe, because federal law requires that cargo hauled between U.S. ports be transported by vessels built and flagged in the United States.
Economic and geopolitical concerns have dominated most of the export debate. But nuclear negotiations with Iran — and a deal that could ease sanctions that have limited its oil exports — have become fresh fodder for the policy fight.
Sen. Lisa Murkowski, R-Alaska, argued Monday at CERAWeek that preserving the crude export ban while lifting trade restrictions against Iran amounts to “a sanctions regime against ourselves.”