January 7

American oil companies call for end to export ban

Skeptics worry that lifting the 40-year-old restrictions would lead to higher gasoline prices and decreased energy security.

By Jonathan Fahey
The Associated Press

(Continued from page 1)

click image to enlarge

A drilling rig near Kennedy, Texas, is shown in this 2012 photo. U.S. oil producers say allowing crude exports would help spur further development of American oil resources and increase the nation’s energy security.

The Associated Press

Refiners who are enjoying lower prices for U.S. crude — and others worried about domestic fuel prices — say allowing exports would raise costs for the industry and for American consumers. By taking away the price advantage U.S. refiners enjoy, oil companies might produce less fuel, invest less in the U.S. and hire fewer people.

“It’s a jobs issue,” says Bill Day, a spokesman at Valero Energy, one of the nation’s biggest refiners. “The Gulf Coast of the U.S. has become a refining hub for the rest of the world. That keeps American refineries open and American workers on the job.”

But it’s not that simple, others say.

If the ban were lifted, some U.S. refiners would probably have to pay more for American crude, but many U.S. coastal refiners already depend on more expensive international crude. And eliminating the ban could lower costs for other refineries.

Lifting the ban, experts say, is likely to have a bigger effect on individual refinery profits than on consumer prices.

“It probably doesn’t change the retail price at the pump, but it may change the incentive for refiners,” says Kevin Book, managing director at ClearView Energy Partners.

Because there is no ban on gasoline and diesel exports, the price of fuel for U.S. consumers is already set on the global market, even if crude oil prices are not. U.S. refiners take full advantage of that. They exported a record average of 2.7 million barrels of fuels per day last year through October, making petroleum products the nation’s top export.

U.S. oil producers say allowing crude exports would help spur further development of American oil resources and increase the nation’s energy security.

“It runs against the conventional wisdom about what oil security means,” says Michael Levi, director of the program on energy security and climate change at the Council on Foreign Relations. “Something seems upside-down when we say energy security means producing oil and sending it somewhere else.”

In the meantime, several companies aren’t waiting for policymakers to settle the debate. At least five are developing simple refining projects along the Gulf Coast to process light, sweet crude just enough to create petroleum products that can be freely exported to foreign refiners.

“It’s not a sleight of hand,” says Tom Kloza, chief oil analyst at the Oil Price Information Service and Gasbuddy.com. “When you have a ban or restrictions, you get opportunity and improvisation.”

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