With U.S. energy production at near-record highs, pressure is mounting on the Obama administration to lift a 40-year-old ban on crude oil exports.
The White House acknowledged last week that sending American crude oil abroad would not drive up domestic gas prices, a common refrain among export opponents. In fact, Energy Information Administration officials said exports actually could drive down prices even further by increasing global supply.
But unlike American natural gas export projects — which President Obama has come to support and the Energy Department gradually has begun to allow — the administration has shown no signs of changing course on the crude oil ban, a relic from the early 1970s when global shortages led the federal government to guard U.S. fuel supplies and block exports.
The dynamic today is dramatically different, with U.S. crude oil production near all-time highs and poised to set a record this year.
“America’s growth as an energy superpower has been a game-changer, but our trade policies are stuck in the 1970s. Study after study shows that free trade in crude oil would promote the creation of U.S. jobs, put downward pressure on fuel costs and reduce the power that foreign suppliers have over our allies,” said Erik Milito, director of upstream and industry operations at the American Petroleum Institute.
Indeed, the U.S. energy landscape has been transformed in just a few years. Less than a decade ago, most analysts predicted that the U.S. would remain a leading importer of oil and gas. Today, America is the world’s No. 1 producer of oil and natural gas, thanks largely to the discovery of vast deposits such as the Bakken oil field and the Marcellus Shale, and the advancement of the drilling technique known as hydraulic fracturing.
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The U.S. produced 3.2 billion barrels of crude oil last year, according to EIA figures, a 30-year high. In 2013, the U.S. produced 2.7 billion barrels, up from 2 billion a decade ago.
Production has remained strong this year at about 9.4 million barrels per day on average, government data show.
Last year, the U.S. also averaged more than 74 billion cubic feet of natural gas production per day, EIA numbers show.
Although the administration gave the green light to natural gas exports — which could help the U.S. become a net energy exporter within five years, according to the EIA — the White House still is standing in the way of oil exports.
The White House has given no indication that it will reverse course on the crude oil ban anytime soon. Top environmental organizations also remain opposed to changing course on oil export policy.
Still, administration officials now acknowledge that selling American fuel around the world could carry real economic benefits, giving more ammunition to export proponents who say the U.S. is missing out on a key economic opportunity.
“If more crude oil enters the global markets, whether it’s from U.S. exports or from Iran or from production anywhere, it would tend to lower the global oil price, which would tend to lower gasoline prices in the U.S.,” EIA Administrator Adam Sieminski told the Senate Committee on Energy and Natural Resources at a hearing last week.
“So one of our reports does suggest that allowing more exports of crude oil will either be neutral or lower the gasoline price,” Mr. Sieminski said. “There were a few studies that suggested it could cause gasoline prices to go up. That seems to be a pretty low probability in our view.”
Days before the hearing, Sen. Lisa Murkowski, Alaska Republican and committee chairwoman, called on the president to lift the crude oil ban.
American exports, she said, would reduce allies’ dependence on fuel from Russia and the Middle East and the U.S. could use its newfound abundance for geopolitical gain.
“Allowing American companies to compete with Russian and Iranian energy will also decrease the revenues currently enjoyed by the mullahs in Tehran and Vladimir Putin in Moscow. All of this can be done without touching sanctions. Any environmental impact would also be negligible, as American oil is produced under some of the strictest safeguards on the planet,” Ms. Murkowski and fellow Republican Sens. John McCain of Arizona and Bob Corker of Tennessee wrote in an article for Foreign Policy magazine.
“The United States is producing more energy today than at any point in its history. There is simply no reason — legal, political or economic — for our nation to refuse to sell energy to our friends and allies,” the senators said. “We have played this role before and can do so again.”
Analysts say the authority to lift the ban rests with Mr. Obama and that exports could begin quickly after presidential action.
“My view is to go ahead. You can do it with the stroke of a pen. Executive action is permissible in these circumstances,” said Tom Duesterberg, executive director of the Manufacturing and Society in the 21st Century program at the Aspen Institute. “You don’t necessarily need to pass a piece of legislation. That would be helpful, but once you lift the ban there’s not much that stands in the way.”