Oil Lobby Speaks Out Against Ban On Crude Oil Exports
December 23, 2013

MIDLAND, Texas — The oil industry’s largest lobby group, the American Petroleum Institute, said Friday that Congress must lift a 1975 ban on the export of U.S. crude oil.

This marks the first time the industry has spoken out so forcefully against a ban that crude producers in Texas and New Mexico say is archaic.

The Permian Basin of Texas and New Mexico is the largest producer of crude oil in the United States, approaching one million barrels of crude every day.

The API says fracking means once unthinkable production levels have become the norm.

The API says it’s time to lift a 40-year-old ban on crude exports imposed after the Arab oil embargo.  API says American crude producers are losing money as they are handcuffed by a law that’s no longer justified.

In a conference call API Vice President Erik Melito said the organization is working with Senators from both parties to lift the ban on exports.

“We’d like to see Congressional leaders continue to work with the administration to make sure this is part of a dialogue and that we’re moving to an end game that will lift and ease these restrictions," he said.

Last week, U.S. Energy Secretary Ernest Moniz said new consideration of the ban is needed “in what is now an energy world that is no longer like the 1970s.”

Gary Huffbauer agrees. He was a deputy assistant undersecretary at the U.S. Department of the Treasury when the ban was in effect. Then, Washington forbade crude exports in the name of protecting energy security.

“Now of course the world has turned upside down with the shale revolution natural gas and oil and these laws are still there," said Huffbauer, now a senior fellow at the Peterson Institute for International Economics in Washington, D.C.

"And the New Mexico and Texas producers are quite right. I mean, it’s both inefficient and unfair,” he said.

There is intense opposition to the possibility of lifting the export ban, however. Sen. Robert Menendez (D-N.J.) chairs the Senate’s Foreign Relations Committee. He says exporting crude will cut U.S. oil reserves translating into higher prices when you fill your car’s gas tank. But support for lifting the bans is growing.

This week, the University of Texas at San Antonio released statistics documenting the economic driver represented by crude oil in West Texas. The study’s lead author Tom Tunstall says there’s another reason to lift the ban.

“The reality is that this inability to export crude oil from the U.S. is going to start causing us some headaches, " he said.

"We may very well overwhelm the refining capacity on the Gulf coast sometime next year because of all the pipelines being built to send crude oil down there.”

In June, a leaked document on API letterhead was obtained by Bloomberg News. The document says the API is looking at legal means to challenge the ban. The API did not comment Friday on that document specifically.

But it did cite a flurry of other reports to buttress its claim that no national energy security will be compromised if the ban is lifted.  

One of those reports — from the Paris-based International Energy Agency — estimates the U.S. will surpass Russia and Saudi Arabia as the world’s largest oil producer by 2015.

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