WASHINGTON — The Chamber of Commerce added its voice to the growing clamor to export American oil on Wednesday, with the group’s CEO casting a U.S. ban on foreign crude sales as an antiquated policy that is on its way out.
“It’s important to look at energy as the next great American revolution that has the potential to help us on national security,” Thomas Donohue told reporters after his “State of American Business” address. “I think you will see us negotiating and working our way through it this year.”
Donohue suggested big changes to the 39-year-old crude export ban are inevitable.
“I want to lift the ban,” he said. “I just want to get it done in a reasonable sequence. It’s not going to happen overnight, but it’s going to happen.”
Donohue’s predictions, delivered one week into the new year, underscore the sense of urgency surrounding the oil export ban, already shaping up to be one of the most heated energy debates in 2014. And increasingly, it appears the White House will be at the center of it.
Acknowledging that election-year politics make congressional action unlikely, Sen. Lisa Murkowski, R-Alaska, on Tuesday called on the Obama administration to use its existing authority under federal law to ease the ban.
American Petroleum Institute President Jack Gerard on Tuesday also urged an end to the ban, which was imposed after the oil embargo in 1975 — long before the current surge in domestic crude production.
U.S. trade policy shouldn’t “be bound by past practices or the vision of the Arab oil embargo in the 1970s,” Gerard said. “It’s a new day; it’s a new time.”
Supporters say that easing the ban would ensure a market for condensate and light, tight oil harvested in North Dakota, Texas and other states — while allowing U.S. refineries to continue processing cheaper, lower-grade crudes from Canada and other countries. Exports of finished petroleum products are largely unchecked.
Some critics argue that the oil should be used to boost the United States’ energy security. They say there’s is no assurance that the U.S. can sustain strong domestic oil production over decades, even years, and exports could hasten the declines.
They also raise the specter of higher oil prices resulting from a winnowing of the price gap between cheaper mid-continent U.S. crude and the higher-cost international benchmark, Brent.
Donohue acknowledged the economic tension.
“Obviously, we want to use the energy at home first,” he said, “but we don’t restrict people from exporting airplanes we make or exporting food products we produce or exporting technology (with some limitations).”
In fact, there are constraints on a host of products that require licenses from the U.S. Commerce Department, from software and electronics to avionics systems and marine equipment.
But as Murkowski noted Tuesday and RBN Energy’s Rusty Braziel described in December, U.S. energy export restrictions boil down to differences in the products’ molecular compositions. Just six atoms separate propane (C3H8) from methane (CH4), but the former can be near-freely exported, where methane or natural gas exports to non-free-trade partners are highly scrutinized.