Energy & Power Subcommittee Approves Lifting Crude Oil Export Ban

Report by HBW Resources Legislative Aide, Zack Burnham

House Energy and Power Subcommittee Hearing Summary
H.R. 702 Markup – “To adapt to changing crude oil market conditions”

PURPOSE: to lift the restrictions against exporting domestically produced crude oil.

RESOLUTION: Bill favorably forwarded onto full House Energy and Commerce Committee.

Arguments Raised for Lifting the Export Ban

Chairman Whitfield (R-KY) presented H.R. 702 for markup as a bipartisan bill with strong support on both sides of the House, as well as support from within the Obama administration. He stated that many industries enjoy freedom of global market denied to oil and gas industry. These restrictions were placed at a time of oil shortage and should be repealed just as other laws from the time period have been.

He cited studies showing that gasoline prices will remain low, and possibly lower, while also spurring job creation in the U.S. For example, an IHS report finds that lifting the ban would create 394k additional jobs by 2030. He stated that new advances in drilling technology allow for production of lighter crude which is not suitable for some domestic refiners but in demand around the world. He also noted that the new proposed Iran deal by the Obama administration allows Iran to export their oil while the U.S. still cannot.

Rep. Upton (R-MI) echoed various points made by Chairman Whitfield, noting also that the growing supply of domestic oil is outpacing our needs and needs a new outlet. Both left and right leaning policy experts agree oil exports would create jobs and boost economic growth.

Rep. Barton (R-TX), the sponsor of H.R. 702, stated that the U.S. has the greatest oil and gas reserve base of any nation in the world, and is the only nation with the capability to substantially increase our product base. Refineries are running at 97% capacity, which equates to secure refinery jobs.

Rep. Green (D-TX) agreed that U.S. refineries are increasing and expanding. However, he stated that the bill needs to reflect need for renovated infrastructure in energy sector as well as assure that domestic needs come before providing for foreign nations.

Rep. Flores (R-TX) believes lifting the ban will provide American consumers with lower energy costs. Furthermore, added revenue to energy companies will allow them to expand and invest further in the domestic energy sector. This would benefit the downstream refining community by stimulating volume and creating lower costs, which means they can reinvest.

Rep. Shimkus (R-IL) echoed the idea proposed by others that lifting the ban would prevent hostile nations from using other nations’ dependence on their crude oil to influence international opinion and policy.

Arguments Raised against Lifting the Export Ban

“Cut us in, or cut it out!” was the refrain from Rep. Rush (D-IL). His big concern was that underrepresented communities would not be benefitted by the opportunities that will come from lifting the ban. He suggested that contracts to minority oil and gas firms could multiply jobs, especially in communities that need it the most.

Rep. Pallone (D-NJ) thinks H.R. 702 has been rushed to markup at the expense of consideration. He believes the result is a big payday for oil producers ($30B by 2025). Additionally, refineries are a great source of middle class jobs and lifting the ban could remove jobs from the U.S. and move them overseas. Lastly, he explained that energy policy cannot be separated from environmental policy and more discussion about the environmental effects of lifting the ban is necessary.

Rep. Doyle (D-PA) stated that the U.S. is far from energy independence, citing a study showing that the U.S. is using ~16M barrels of oil per day while only producing ~9M barrels.

Rep. Castor (D-FL) opposed H.R. 702 on grounds that there is no current ban: thoughtful and strategic export to our allies is allowed. Further, she said exporting American oil would feed the uncertainty in an oil and gas industry that is currently strong. She believes China would be the real winner, saying we don’t want them to get a “strategic foothold over our natural resources.”