Crude exports receive a push
WASHINGTON — Exporting U.S. crude would drive more domestic energy production and deliver benefits to rural America, oil producers and their congressional allies said Wednesday.
There’s no apparent downside to lifting the longstanding ban on crude exports, insisted House Agriculture Committee Chairman Michael Conaway, RMidland, as his panel examined the issue.
Oil export advocates so far have focused on the broad potential economic and geopolitical benefits of allowing foreign crude sales, but on Wednesday they emphasized what rural communities stand to gain. A House Energy and Power Subcommittee hearing Thursday is expected to delve even deeper into the issue, with a hearing on legislation from Rep. Joe Barton, R-Ennis, that would lift the exports ban.
Continental Resources CEO Harold Hamm said crude exports would propel domestic oil development, with royalties and rental payments to owners of land and mineral rights, including farmers using the revenue to sustain their operations.
“Royalty payments to more than 10 million landowners across America have contributed greatly to the support of the family farms and ranches and the
rural way of life,” Hamm said.
Kari Cutting, vice president of the North Dakota Petroleum Council, said drilling and production in the Bakken shale formation is yielding more abundant and cheaper diesel and fertilizer for agricultural producers.
New fertilizer plants planned in North Dakota to capitalize on natural gas flowing out of Bakken wells offer the promise of cheaper alternatives to foreign fertilizer imports, she said. And a new refinery in North Dakota is set to transform Bakken crude into 7,000 barrels of diesel per day.
“There has not been a recent harvest where we haven’t experienced a shortage of diesel fuel,” Cutting said. “This refinery is just one step forward in helping agriculture get the energy resources they need to harvest their crops.”
There was scant mention of how a surge in crude transported by the nation’s railroads delayed shipments of agricultural commodities, such as grain and sugar, last year.
But Cutting stressed that oil-spurred railroad investments in North Dakota also help agricultural commodities, in some cases ensuring rail service for rural elevators that have been without it for years.
David Porter, chairman of the Texas Railroad Commission, which oversees energy in the state, said oil exports would help blunt OPEC’s power, while providing an incentive for drilling and development activities curtailed amid relatively low crude prices.
“Crude oil exports would spur new American energy production, foster economic growth and provide direct benefits to rural America and our nation as a whole,” Porter said.
With oil prices low, farmers and ranchers are already paying less for the diesel that powers their tractors and trucks as well as the propane used to dry grain.
Several studies have concluded that U.S. oil exports could help lower global crude prices as well as domestic gasoline prices that track them. But there has been less attention to the possible price implications for other refined petroleum products, including diesel and jet fuel.
Under current trade policy, those refined petroleum products can be freely exported. And while exports of raw crude are generally barred, there are exceptions for some California crude, oil extracted in Alaska and shipments to Canada.
Refiners, including some lobbying against oil exports, say they are investing heavily to process more of the light, sweet crude flowing out of U.S. wells.
Some refineries that rely heavily on waterborne shipments of crude also argue that oil exports could empower their foreign competitors to buy U.S. crude more cheaply than they can. The higher costs, they say, primarily come from federal Jones Act requirements that they use American-made and -crewed ships anytime they transport cargo among U.S. ports.