Even with low prices, US oil industry pushing for exports

HENRY C. JACKSON, Associated Press
FILE - In this Dec. 13, 2014 file photo, Sen. Ted Cruz, R-Texas talks with reporters on Capitol Hill in Washington. Never mind dropping oil prices. U.S. producers are pushing harder than ever for the right to sell U.S. crude oil overseas. It might seem counterintuitive: Oil prices are as low as they have been at any point since 2009 and the height of the Great Recession. Depending on the projection, prices could drop further still with slowing economies across the world. Oil producers are playing a longer game, betting that long-term demand remains strong and new markets offer lucrative rewards for U.S. producers. (AP Photo/Lauren Victoria Burke, File)
Copyright 2014, The Associated Press

WASHINGTON (AP) — Never mind dropping oil prices. U.S. producers are pushing harder than ever for the right to sell U.S. crude oil overseas.

It might seem counterintuitive: Oil prices are as low as they have been at any point since 2009 and the height of the Great Recession, and some say they could drop even further. But oil producers are playing a longer game, betting that long-term demand will be strong and new markets offer lucrative rewards for U.S. producers.

Supporters see possible inroads in a Congress controlled by Republicans who generally are considered more receptive to oil exports, as well as some signs that the Obama administration may at least be open to consider changes to longstanding policy, which bans the export of raw crude.

The ban was put in place in the 1970s after the OPEC oil embargo led to fuel rationing, high prices and iconic images of long lines of cars waiting to fuel up.

The American Petroleum Institute, the oil industry's top lobbying arm, is running TV ads highlighting the growth of the U.S. shale oil industry as evidence that the there's enough oil for both domestic and overseas markets. The organization lists overturning the ban as its top priority for 2015.

Jack Gerard, the organization's president, said the policy is the result of "a politically motivated disconnect between today's much-changed energy landscape and the political orthodoxy of some who continue to push for arbitrary and unfair limits or an outright ban."

Besides the financial incentive, Gerard and supporters argue that lifting the ban would help control prices for consumers and give the U.S. a stronger hand in foreign policy.

Opponents argue just the opposite: They say exporting oil now would result in higher gas prices and prevent the U.S. from achieving a goal of energy independence. Opponents include many domestic oil refiners, which stand to lose business if crude oil is exported.

"The oil markets and the markets for various petroleum products are extremely complicated and I think that to mess with this upsets the equilibrium that's there," said Jay Hauk, executive director of Consumers and Refiners United for Domestic Energy, or CRUDE, which represents a group of oil refiners.

Hauck said the policy shouldn't change while the U.S. continues to import great quantities of oil.

The U.S. imported 9.9 million barrels of oil per day in 2013, from some 80 countries, according to the U.S. Energy Information Administration.

Simply increasing U.S. production to eliminate imports is not that simple, though. Different types of oil have different uses, and U.S. production is predominantly lighter, "sweet" crude oil.

Many U.S. refineries are equipped to handle heavier crude produced by countries like Mexico and Canada. Producers argue that shipping to countries in Europe and Asia, where refineries are equipped to more efficiently handle lighter oil, makes economic sense until more U.S. refineries can efficiently process lighter oil.

"The reason for allowing exports is primarily that not all oil is the same," argued a 2014 report by the Aspen Institute, which backed lifting the ban.

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