WASHINGTON — The head of a Republican energy task force predicts the U.S. House of Representatives will advance legislation next year to relax a decades-old ban on exporting most U.S. crude.
Without changes, said Rep. Joe Barton, R-Ennis, energy companies will continue exploiting exceptions in the current ban to sell U.S. crude overseas — and that oil will flow without the benefit of an across-the-board transparent process.
“You’d be better off — and have a more efficient market — if you just went ahead and repealed it, required public disclosure and let the market operate,” Barton said in an interview.
GOP leaders in the House have so far been skittish about tackling the politically treacherous topic before the Nov. 4 elections. The Senate has taken a more aggressive approach, with Sen. Lisa Murkowski, R-Alaska, leading a push to end the 1970s-era export ban. The Senate Energy and Natural Resources Committee also held a hearing to examine trade restrictions on oil.
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But Barton’s comments signal the House will get more involved in the debate over the export ban next year, probably with hearings and legislation.
“I would assume that we would have a bill and be ready to move it pretty quickly in the next congress,” Barton said, adding that he hoped it would be “a bipartisan bill,” with Democrats and Republicans as sponsors.
At least one repeal bill has already been introduced in the House. Rep. Michael McCaul, R-Austin, in April introduced a measure to end the ban entirely. That legislation has not had a hearing nor advanced through a House committee.
Republicans could push a complete repeal or pursue a more modest approach.
“I think it is almost inevitable that you’ll either see a complete repeal, which would be the cleanest, and, I think, most efficient,” Barton said. “But, if you were not to do that, I think you will see, legislatively, an expansion of what is allowed, and I do think that debate will start in earnest early in the next Congress.”
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Barton speaks with authority; he heads the Republican Study Committee’s energy task force studying oil exports.
Although the House Energy and Commerce Committee hasn’t held a hearing on oil exports yet, panel spokeswoman Charlotte Baker said it is studying the issue.
“The committee is currently conducting analysis on oil exports and staff is continuing to meet with stakeholders and relevant agencies on this issue,” Baker said. “We plan to build upon this analysis next congress.”
The export ban, created in the wake of the 1973 OPEC embargo, makes exceptions for some Californian and Alaskan crude, foreign-origin oil that has passed through the United States and exports to Canada. It does not affect petroleum products, such as gasoline, diesel and jet fuel, which can be exported.
The Obama administration could make some changes to the ban without approval from Congress.
Already, the Commerce Department’s Bureau of Industry and Security has affirmed that two Texas companies can export the ultra-light oil known as condensate after minimal processing, a decision that tests the limits of the ban and what is traditionally considered a refined petroleum product. Energy companies also are considering exchanging U.S. crude for foreign oil, a type of transaction allowed under the ban.
But it is the prospect of a wholesale relaxation of the underlying ban that has ignited fierce lobbying, with oil producers taking their case for exports to Congress even as some refiners ask lawmakers to preserve the status quo. Refiners generally benefit under the current dynamic because they can buy discounted U.S. crude and sell gasoline at prices pegged to the higher world cost of oil.
Refiners say they already have made changes to increase the amount of light, sweet U.S. crude they can run through their facilities and argue they can boost their capacity further.
Barton has heard from all stakeholders in the debate — including producers, refiners and motorists — and the issue has been raised during his town hall meetings in Texas.
“The dominant voice is to repeal the ban, because genetically, Republicans tend to be for the freest market possible,” he said. “Certainly, repealing the ban on oil exports meets that test. We also tend to be for free trade and increased economic growth, and, again, repealing the ban on exporting crude meets that test.”
Barton said he believes lifting the ban would encourage further domestic oil production and, ultimately, help U.S. refiners. And, he agrees with economic studies suggesting gasoline prices would drop if more U.S. oil flowed into the global market.
“Unless you eliminate or ease the restrictions on crude oil exports, you’re going to see domestic crude oil production slow down and the price you get for domestic crude suppressed, because we don’t have the domestic refining capacity to refine it,” he said. “If we allow that crude to be exported, to some extent, we put a little bit of a cap on world oil prices, but we get a much-needed balance of trade and hard currency exchange for the United States.”
Last month, Barton joined Reps. Marsha Blackburn, R-Tenn., and Leonard Lance, R-N.J., in a visit to South Korea. Although oil exports came up during discussions with leaders of the country, Barton said the focus was mostly on getting access to refined petroleum products and liquefied natural gas from the United States.