HOUSTON — The United States should use its oil and gas bounty as a strategic weapon, helping to protect allies and tame crises like those unfolding in Russia and Venezuela, Sen. Lisa Murkowski said Monday.
“I’m not saying we need to go out there and throw some sharp elbows, but I do think we need to be aware of what we have and how important a tool diplomatically an energy asset can be,” Murkowski said after delivering an opening speech to the IHS CERAweek energy summit in Houston.
Murkowski said surging American oil and gas production “needs to go into the political calculation” and be a “strategic asset” for Secretary of State John Kerry, as the U.S. responds to Russia’s seizure of the Ukraine’s Crimean peninsula.
Crude oil prices climbed about $2 a barrel on Monday amid concerns that Russia’s invasion could cause disruptions in the natural gas it supplies to European countries. Meanwhile, violent protests are taking place in Venezuela amid high inflation, climbing crime and other social concerns.
If more U.S. oil and gas enters the global market, it could help tame world prices by calming supply fears while simultaneously spurring more domestic production, Murkowski told the CERAweek audience.
“We’ve got a cushion now because of what we are producing,” said Murkowski, R-Alaska. “It allows for . . . a level of stability worldwide that we simply would not have had” otherwise.
But right now, America’s “ability to respond quickly and nimbly” is hampered by limits on oil and gas exports, Murkowski stressed. ”If this was a situation where we wanted to use our natural gas opportunities as political leverage, we’re not in that place now.”
The Department of Energy has approved six licenses to broadly export liquefied natural gas to countries that are not free-trade partners with the United States, but five of those still must clear other regulatory reviews at the Federal Energy Regulatory Commission, and the facilities would take years to build. Some two dozen other export applications are still pending at the Energy Department.
A 39-year-old law bars exports of unprocessed crude, with small exceptions for Californian crude, oil from Alaska and sales to Canada.
Murkowski on Monday argued that the Obama administration should expand the exceptions to allow exports of the ultra-light lease condensate that is flowing out of wells in the Eagle Ford and other shale plays along with crude.
“The Commerce Department’s Bureau of Industry and Security should, in my view, thoughtfully and deliberately amend its short supply controls to permit the export of condensate,” Murkowski said, noting that other presidents have carved out exceptions to the broader ban on foreign oil sales.
Murkowski said she was looking to the Obama administration to act in a “pragmatic” recognition that legislation on the issue is not likely to advance on Capitol Hill during an election year. But it is not clear that the White House would touch the issue before the November elections because of the same political considerations.
Murkowski also said she was asking the government’s Energy Information Administration to conduct an economic analysis of the potential impacts of authorizing more crude oil exports. That follows a similar move by Sens. Ron Wyden, D-Ore., and Maria Cantwell, D-Wash., last month.
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