Pump jacks are seen at dawn in an oil field over the Monterey Shale formation where gas... Read More
With U.S. output at a 31-year high and imports at the lowest level since 1995, producers seeking the best possible price for crude are straining at having to keep sales at home. Removing the ban could erase an imbalance between U.S. and foreign crude prices by expanding the market for shale oil.
A 38 percent decline in crude prices since June, “will weigh into the debate” and help make the case to lift the export ban, said Senator Lisa Murkowski, the Alaska Republican poised to take over as head of the Energy and Natural Resources Committee next year.
Lawmakers in Washington are set to hold a hearing next week on
dropping the ban. Murkowski hasn’t decided yet whether she’ll introduce a bill to allow exports. Republicans, who are slated to take control of both houses of Congress next year, have yet to reach consensus on what to do.
The top House and Senate Republicans haven’t yet taken a position on the matter and some rank-and-file members, including Senator Susan Collins of Maine, say they are wary of action because of fears it may lead to higher gasoline and heating-oil prices.
Senator Lisa Murkowski, a Republican from Alaska poised to take over as head of the... Read More
Global Competition
The drop in prices exacerbates the pain of the export limit, said Erik Milito, upstream policy director for the American Petroleum Institute, a lobbying group that represents producers including Exxon Mobil Corp.“This is a global competition for market share,” Milito said. “These other regions around the world want to raise the competitive pressure on U.S. energy and we’re asking our policymakers to at least put the U.S. on a level playing field.”
Since many U.S. refineries use heavier crude, instead of the light sweet variety that comes from shale formations, opening up the export market would give producers more customers. Refiners who benefit from the declining cost of crude they process have fought the idea of exports.
$2 Gasoline
“We support the current system regardless of the price and we are building more capacity to process domestic crude,” said Bill Day, a spokesman for Valero Energy Corp.A decision by the Organization of Petroleum Exporting Countries last week to keep oil output unchanged has been viewed in the U.S. as an effort to depress prices and slow production growth from shale plays. West Texas Intermediate oil prices fell 10 percent the day after the OPEC decision was announced.
Led by declining crude, gasoline prices fell below $2 a gallon at a station in Oklahoma City this week.
The Government Accountability Office, Congress’s investigative arm, in an October report concluded that exports may lower pump prices by as much as 13 cents a gallon, even as they raise U.S. oil prices. That would happen because gasoline is pegged to Brent, a global benchmark price, rather than West Texas Intermediate, GAO said.
EIA Analysis
Many in Congress are awaiting an analysis from the Energy Information Administration, which collects and analyzes energy data, on the tie between U.S. gasoline prices and global oil markets.“Should we let our foreign policy be driven by our need for foreign oil like we have for the past 40 years? I think not,” Tom O’Malley, chairman of refiner PBF Energy Inc., told reporters in Houston last month.
Limited crude exports, which include shipments to Canada, have surged to a near-record. The U.S. Commerce Department in June expanded its definition of what kind of oil products can qualify for foreign sale, allowing companies to send it out after minimal processing.
“The international energy markets clearly look very, very different from what they looked like in 1975,” U.S. Energy Secretary Ernest Moniz said at the Council on Foreign Relations in October. “It’s worth a re-examination.”
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