This week Senator Lisa Murkowski (R-AK) will meet with Commerce Secretary Penny Pritzker to discuss expanding the classification of refined oil exports to include condensate products. The meeting comes as part of an important larger movement in Washington to relax decades-old restrictions that create a glut of domestic crude oil here at home.
Sen. Murkowski has been a strong proponent of reforming outdated trade restrictions dating back to the 1970s that prevent American producers from selling natural gas and crude oil products to markets overseas. Hers has been a voice of leadership that Washington needs. In January Sen. Murkowski largely initiated what has become a national call to repeal these export restrictions, and last week she issued a report urging the Commerce Department, which manages oil exports, to allow condensates to be exported alongside other refined petroleum products.
America is now in the midst of an energy renaissance, but the continued sustainability of this boom is dependent on sensible policy that incentivizes investment and competition. The longer the United States isolates itself behind closed trade borders the more other countries are mobilizing their capabilities and stepping in to meet global demand.
As counter intuitive as it may seem – exporting U.S. oil will have a stabilizing impact on U.S. gas prices. Additional oil on the international market, where prices are determined, means lower gas prices at home.
Additionally, because only a fraction of the fewer than 150 refineries in the States are equipped to process light-grade oil, the abundance of crude product doesn’t benefit consumers much. In fact, exporting these products to countries better equipped to refine them could cut prices at the pump by as much as 3.8 cents, saving upwards of $5.8 billion per year, according to the American Petroleum Institute.
Sen. Murkowski needs no pointers when it comes to these issues, but it is important her message, one increasingly voiced among lawmakers, reaches the Obama Administration. Though largely unheralded, her meeting with Sec. Pritzker is an important opportunity to shape an environment that will foster energy growth. There are several points energy producers and consumers alike hope will resonate.
In the course of only a few short years the United States has repositioned itself as a global energy leader. The dynamic shift comes as a result of expanded oil and natural gas development on domestic soil, driven by prudent investment in infrastructure and exploration of America’s vast shale reserves. In 2008, the United States produced about 5 million barrels of oil per day; next year that figure is expected to reach 9.3 million. The United States will soon surpass Russia and Saudi Arabia as the world’s largest oil producer, according to the International Energy Agency.
Sustainable energy growth depends on global demand. Greater shale development has produced a surplus of domestic crude oil. Unfortunately, most U.S. refineries are not equipped to process this light product, creating a bottleneck. As stockpiles grow, incentives for producers fall, deterring investment and sidelining new projects. The resulting economics cause developers to forego new projects and will leave the United States at a competitive disadvantage to other countries.
Protectionist policies isolate the United States from the global market and threaten domestic production. Restrictions on oil and gas exports were implemented in the wake of Iranian oil embargo, which shocked supplies here at home. Now the United States is on the other side of the equation; in addition to meeting our own needs we have the resources to help meet global demand. At the same time, these resources give the United States a strong geopolitical tool to help support our allies and create greater stability in the international markets.
The United States has the resources to continue to meet our own needs and supply global markets. This year America became a net energy exporter, a position that the country can maintain for years to come. A biennial report by the Potential Gas Committee found the United States has the highest levels of recoverable fossil fuels in the organization’s 48 year history. Already increased sales of refined products have helped stabilize prices in the global marketplace against turmoil in the Middle East and elsewhere that would have
It is important U.S. policy catch up with these changing dynamics. America’s window to capitalize on our newfound energy wealth is closing. The longer the authorities stall and allow partisan politics to supersede progress the more footing we lose as a country. There is a growing consensus within Washington to repeal energy export restrictions; now is the time for the Administration, who hold the keys, to act.
This week’s meeting between Sen. Murkowski and Sec. Pritzker is an opportunity to begin reshaping American energy policy. Let’s hope the Senator from Alaska’s message does not fall on deaf ears.