The senior Republican on the Senate Energy and Natural Resources Committee called for the lifting of the nation's decades-old ban on crude-oil exports in a speech Tuesday, adding a key voice to a growing chorus supporting the policy change.
"I am calling for ending the prohibition on crude-oil and condensate exports," Energy ranking member Lisa Murkowski of Alaska said in an appearance at the Brookings Institution. "The current system is inefficient and may lead to supply disruptions that we can ill afford."
Changing this current system, which dates back to the 1973 OPEC oil embargo and skyrocketing gasoline prices, will be a Herculean task. Just a year or two ago, before Washington caught up to the repercussions of the nation's oil and natural-gas boom, such a policy change was considered unthinkable. Murkowski said the administration has the power to change the law itself, which is administered within the Commerce Department and allows only a very small amount of crude oil to be exported. She doesn't think legislation is necessary, but if the administration doesn't move forward, she's prepared to.
"If the administration is unwilling to act on its own or if that statutory authority needs further modification, I'm prepared to introduce legislation to modernize the laws," Murkowski said.
She went on to say that perhaps Washington could pursue a two-pronged approach: Congress could push legislation on updating the nation's energy infrastructure, which is outdated and not equipped to handle the oil and natural-gas boom of the past six years, and the administration could do its part to lift the ban on crude-oil exports.
Since 2008, U.S. oil production has increased 56 percent, and crude-oil imports have correspondingly fallen to the lowest level since the mid-1990s. In response to this oil boom, refineries have been exporting record amounts of gasoline, diesel, and other products refined from oil, which do not face the same federal trade restrictions as crude oil.
One of the biggest—if not the biggest—challenge to changing the law restricting crude-oil exports will be concerns about whether lifting the ban would increase gasoline prices, a claim consumer advocates and some members of Congress, including Senate Foreign Relations Committee Chairman Robert Menendez, D-N.J., and Sen. Edward Markey, D-Mass., have made. Murkowski addressed this directly in one of the most forceful parts of her speech.
"Opponents of trade will be quick to assert, too often without citing any evidence, that exports of crude oil will raise gasoline prices for American consumers," Murkowski said in her speech, which was also accompanied by a white paper on the topic. "This claim is wrong, but it must be dealt with immediately and head-on."
She continued: "I have said repeatedly—and I mean it—that the goal must be to make energy more affordable," Murkowski said. Changing this policy during an election year, when high gasoline prices can mean the death of any incumbent, is about as difficult as a task could get.
"What you need to remind Americans, what you need to remind members of Congress, is that when you increase supply, that actually helps reduce price," Murkowski said after her speech.
Charlie Drevna, president of the trade group representing refineries, the American Fuel and Petrochemical Manufacturers, said gasoline prices probably wouldn't be affected.
"I don't know what effect it'd have, if any," Drevna said in a recent interview. "It's going to be set on a global market."
Some of Drevna's member companies, including Valero, do not support lifting the ban. Drevna said his group doesn't oppose lifting it. Nonetheless, a rift is brewing within the oil industry over how much the policy should change, since refineries are reaping a financial windfall from the glut of oil in the country.
"They're going to have to deal with that within the industry," Murkowski said. "From a policy perspective, it's good policy, again, to allow for that level of trade. My interest is not to protect the refineries' bottom line."
Menendez said Tuesday that he remains unconvinced that exporting crude oil is in the nation's interest.
"If it doesn't get used domestically, then it doesn't help the consumers in this country," he said in the Capitol.
"Someone needs to make the connection for me -- why we should drill but not insist that the oil stay here," Menendez said.
Senate Energy and Natural Resources Committee Chairman Ron Wyden, D-Ore., was less critical but didn't endorse the idea either.
"My position with respect to that whole discussion is A) I know we are going to have a debate on that and B) Making sure that the bottom line is that anything done protects the consumers' interest," he told reporters in the Capitol.
"Certainly there are going to be questions raised about how the consumer is going to fare in all this, and that is going to be my focus," Wyden added.
Markey said he would release reports soon that describe how exports would harm the U.S. economy and security.
"The American people want our American resources to stay here to benefit our industries, our families, and our security, not sent to China and other competitors," Markey said in a statement.
Ben Geman contributed to this article.
This article appears in the January 8, 2014 edition of NJ Daily as Murkowski Joins Chorus Calling for Crude-Oil Exports.
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