U.S. Senator Lisa Murkowski, today announced plans to introduce legislation this year to end the 40-year-old ban on exporting U.S. crude oil. Her remarks were made in Houston during the annual CERAWeek event.
“America has entered an era of energy abundance. Imports are down, and so are prices. We are on the verge of being able to help our allies and trading partners with our energy – instead of competing with them for supply from others,” Murkowski said.
She went on to specifically address the fact sanctions against Iran may soon be lifted which over the next few years could lead to an additional 1 million barrels of oil per day hitting the global oil markets.
“The United States has a general prohibition – a ‘ban’ – on exports of domestic crude oil. To me, this equates to a sanctions regime against ourselves,” Murkowski said. “It hurts American producers, who have to sell oil at a significant discount to Brent, and it hurts American consumers, whose prices at the pump are higher than they would otherwise be.”
“We should not lift sanctions on Iranian oil while keeping sanctions on American oil. It makes no sense,” Murkowski added.
In early January, Ryan Lance, CEO of ConocoPhillips made a similar call for the crude oil export ban in Washington, D.C. “The U.S. energy situation has improved significantly since the ban was put in place,” Lance noted in his presentation at the Center for Strategic and International Studies, CSIS. “Government should recognize the new reality of the renaissance that has transformed North America from energy scarcity to abundance, and enable the industry to keep it going. We have just scratched the surface of its potential, and can help ensure that the renaissance continues as an engine of long-term economic growth by exporting our excess crude oil into the world market. Thanks to our new energy abundance, domestic refiners would still have all the oil they need, and would still enjoy a competitive advantage over foreign refiners.”
Meanwhile however, the United States’ refineries are decades old and there appears to be no push to update them or build new ones to keep up with the growth in U.S. production.
It’s quite a different story however in Saudi Arabia where production is being maintained at a high level and huge investments are being made to not only continue production of this commodity, but to turn it into a refined product for consumers.
While unlimited crude oil exports will undoubtably benefit the United States’ trade balance and will create jobs within the upstream exploration and production sector, lawmakers and executives such as Senator Murkowski and Ryan Lance appear to be forgetting that crude oil is not energy, but rather a commodity that needs to be refined in order for it to be used. Without a subsequent investment in domestic refining capacity, it appears that opening up unlimited exports of crude oil will not support the United States’ energy security in the long term, but rather shift it more toward Saudi Arabia.