Senate panel advances oil exports in near party-line vote, signalling trouble ahead for bill

WASHINGTON — Legislation authorizing crude exports advanced through another congressional panel on Thursday with a mostly party-line vote that underscored some senators’ deep skepticism of making a big trade policy change to benefit oil producers without new environmental safeguards or taxes.

“If there is a realistic opportunity to get something like this passed, it’s going to require a more comprehensive approach,” said Sen. Mark Warner, D-Va. “There are environmental issues to be dealt with, there are jobs issues and, honestly, there are revenue issues as well that could be part of the mix.”

The panel ultimate voted 13-9 to approve the oil exports bill authored by North Dakota Sen. Heidi Heitkamp, who was the only Democrat to cross party lines and join the 12 committee Republicans in favoring the measure.

But passage came at a cost. The committee first added a controversial provision to require Iran to use proceeds from a nuclear deal to compensate terrorism victims who have won U.S. court rulings against the country.

The language, sponsored by Sen. Pat Toomey, R-Pa., was adopted 13-9, despite Heitkamp’s warning that it is a “poison pill” that could bring down the whole bill.

ClearView Energy analyst Kevin Book said the Iran amendment’s adoption “virtually guarantees that (the exports bill) will not survive on the Senate floor, where Democrats have repeatedly demonstrated that they have at least 41 votes necessary to protect President Obama’s Iran deal.”

The committee rejected other efforts to amend the bill, including a plan by Toomey to gut the cornerstone of the nation’s biofuel policy by spiking a requirement that refiners blend traditional renewable fuels into gasoline.

Related: Sen. Pat Toomey seeks to shred biofuel mandates as part of oil exports bill

Two other measures advanced by Sen. Robert Menendez, D-N.J., also were rejected. One would have delayed the effective date of the crude oil export ban repeal until the Government Accountability Office studies potential job losses from the change. The other would have postponed oil exports under the bill until the United States produces enough crude to satisfy domestic demand.

“The United States is nowhere close to breaking its dependence on foreign crude oil,” Menendez said, noting the nation imported about 7 million barrels of oil per day last year.

“I don’t think that any American thinks that the idea of creating energy independence is to drill more federal land and water so we can take it and export it abroad,” Menendez said. “I think Americans would be appalled to know that we’re considering exporting U.S. oil at a time that we’re still reliant on foreign oil — to know that instead of investing in U.S. refineries and creating good-paying jobs at home, we are considering a policy that would send those jobs to refineries overseas.”

Oil export advocates counter that some imports of foreign oil are locked in — partly to supply domestic refineries that demand some heavy crude, not just the lighter variety flowing out of most U.S. fields today.

Additionally, “28 percent of U.S. refining capacity is owned by foreign interests who will always import heavy sour oil produced and imported from their own country,” said Sen. Richard Shelby, R-Alabama.

This is the second time a Senate committee has approved legislation authorizing widespread crude exports, going beyond the limited amounts allowed now to Canada and from California and Alaska. The Senate energy committee approved a similar bill authored by Sen. Lisa Murkowski, R-Alaska, earlier this year.

The House is expected to vote on its own legislation, a bill by Rep. Joe Barton, R-Ennis, next week. New television advertisement airing in selected markets around the country aim to pressure Democratic lawmakers to support the bill. In Houston, the campaign launched by a coalition of oil producers targets lawmakers Sheila Jackson Lee and Al Green. In San Antonio, the campaign is focused on Reps. Joaquin Castro and Filemon Vela Jr.

Heitkamp, whose home state of North Dakota is home to aggressive drilling in the Bakken shale formation, cast the trade policy change as a matter of fairness. Current law allows widespread exports of refined petroleum products, such as gasoline and diesel, even though raw, unprocessed crude is mostly blocked from the same foreign sales.

“If we’re really talking about controlling an exported product so we can control the price at the pump, then why are we exporting refined product?” Heitkamp questioned. “We’re trying to control the raw material, but the entity that’s actually being used by consumers has full access to whatever market it wants to find, whether it is in a friendly European country or otherwise.”

A raft of analysis by academics, think tanks and government agencies suggest exports could modestly increase the price of U.S. crude while keeping domestic gasoline prices about the same or slightly lower, since they tend to track the cost of an international crude benchmark.

But Sen. Elizabeth Warren, D-Mass., said she is skeptical of those reports, largely because of the oil interests aggressively pushing to liberalize crude trade.

“The most obvious effect of lifting the crude oil export ban would be to produce enormous profits for a number of big oil companies,” she said, “and that is a reason by itself to be skeptical of study after study and expert after expert that have been funded by Big Oil to try and sell this deal.”

Some Democrats have floated the idea of combining oil exports with other energy provisions, such as renewable energy programs, ending tax incentives for the sector or imposing a new per-barrel production tax to fund highways and other infrastructure.

That dealmaking talk continued Thursday, as Warner touted a more comprehensive approach and Democratic Sens. Joe Donnelly of Indiana and Jon Tester of Montana indicated they wanted to see a move to protect refinery jobs as part of any bid to authorize widespread oil exports. Donnelly also floated the idea of mandating U.S. steel for any pipeline that facilitates crude exports.

Oil export advocates cheered the measure’s approval — including “aye” votes from two panel Republicans, Toomey and Mark Kirk of Illinois, that recently had been in question.

George Baker, executive director of Producers for American Crude Oil Exports, said he was “encouraged by the constructive dialogue at the Senate banking committee.”

The panel’s approval of the Heitkamp’s legislation reflects “a large and growing body of authoritative independent research” predicting economic and geopolitical benefits from liberalizing crude trade, Baker added.