When Conservatism Collides With America’s Oil Boom

Republicans and free-traders are conflicted about lifting the crude-oil export ban.

BELLE CHASSE, LA - JUNE 4: An oil tanker is seen docked at the ConocoPhillips Alliance Refinery June 4, 2008 in Belle Chasse, Louisiana. The refinery, located in Plaquemines Parish, processes 247,000 barrels of crude oil per day. Oil production suffered significant damage in the state by Hurricanes Katrina and Rita but high oil prices have driven the value of Louisiana's petroleum and coal exports up 127 percent. Petroleum and coal exports totaled $2.5 billion during the first quarter of 2008 compared to $1.1 billion in the first quarter of 2007. 
National Journal
Jan. 12, 2014, 7:35 a.m.

“I sup­port free trade, but “¦ “

When a Re­pub­lic­an is about to say why he or she isn’t gung ho about lift­ing the dec­ades-old ban on crude-oil ex­ports, you should hear some vari­ation of that phrase. It’s usu­ally fol­lowed by these kinds of qual­i­fi­ers:

” “¦ Amer­ica is still im­port­ing a lot of oil.”

” “¦ we should ex­port more value-ad­ded products, like those re­fined from crude oil.”

” “¦ this is­sue is a lot more com­plic­ated than you’re mak­ing it seem!”

It’s polit­ic­ally tricky for a Re­pub­lic­an, whose party by prin­ciple rep­res­ents free mar­kets, free trade, and small gov­ern­ment, to op­pose lift­ing a fed­er­ally im­posed ban on ex­port­ing a product. (Demo­crats, whose party em­braces lar­ger gov­ern­ment, get a more of a free pass on this.)

That makes it all the more in­ter­est­ing that a hand­ful of key House Re­pub­lic­ans are sur­pris­ingly cau­tious about lift­ing the ban on crude-oil ex­ports, which Con­gress put in place in the af­ter­math of the 1973 oil em­bargo by Middle East­ern pro­du­cers.

“For us to be in­tro­du­cing le­gis­la­tion to al­low the ex­ports right now might be a little bit pre­ma­ture,” House En­ergy and Power Sub­com­mit­tee Chair­man Ed Whit­field, R-Ky., said in an in­ter­view Thursday. “I think we need to let this whole thing play out.”

Le­gis­la­tion aside, he did not say wheth­er he would sup­port lift­ing the ban, as Sen­ate En­ergy and Nat­ur­al Re­sources rank­ing mem­ber Lisa Murkowski, R-Alaska, did in a speech last week.

In­stead, Whit­field went in­to a lengthy de­scrip­tion of how the is­sue is more com­plex than simply pro­du­cing a lot more oil than the coun­try has in dec­ades. He said oil com­ing out of North Dakota’s vast Bakken field is a dif­fer­ent type of oil than the type the coun­try’s main re­finery hub along the Gulf Coast is equipped to pro­cess. He men­tioned the Jones Act, which re­quires all goods — in­clud­ing en­ergy products — that are shipped in U.S. wa­ters from one part of the coun­try to an­oth­er to be trans­por­ted on a ves­sel built in the U.S. Lastly, he made an ar­gu­ment that will res­on­ate across parties and the coun­try:

“We’re still im­port­ing oil,” Whit­field said.

The coun­try is im­port­ing about 40 per­cent of its pet­ro­leum, which is the low­est amount since 1991, ac­cord­ing to the En­ergy In­form­a­tion Ad­min­is­tra­tion, but that’s still a large per­cent­age. EIA pre­dicts that num­ber could drop even lower to 28 per­cent in years to come giv­en Amer­ica’s oil boom.

Whit­field’s com­ments are sim­il­ar to those made Fri­day by Rep. Doug Lam­born, R-Colo., who chairs the En­ergy and Min­er­al Re­sources Sub­com­mit­tee of the House Nat­ur­al Re­sources Com­mit­tee. He used the crude-oil ex­port ban as an op­por­tun­ity to cri­ti­cize the Obama ad­min­is­tra­tion for not al­low­ing more drilling in the Gulf of Mex­ico. He fi­nally ar­rived at his rather small an­swer to this big de­bate.

“As long as 85 per­cent of our out­er con­tin­ent­al shelf re­mains closed by this ad­min­is­tra­tion, as long as less than 2 per­cent of our fed­er­al on­shore min­er­al es­tate is avail­able for leas­ing, as long as this ad­min­is­tra­tion drives out re­source de­vel­op­ment on new sources of en­ergy like do­mest­ic oil shale, those dis­cus­sions are pre­ma­ture,” Lam­born said at a hear­ing on do­mest­ic en­ergy pro­duc­tion Fri­day.

“Let me be clear, I sup­port free trade,” Lam­born stressed. “I also sup­port Amer­ic­an en­ergy in­de­pend­ence and that is a road we are on but we are still far from our goal.”

Even the most com­mit­ted free-mar­keters real­ize Wash­ing­ton will not look on this de­bate lightly. Old memor­ies die hard, and politi­cians of all parties are also ter­ri­fied that lift­ing the ban could raise gas­ol­ine prices, or at least be por­trayed that way on the cam­paign trail.

“The jit­ters about en­ergy in­de­pend­ence are shared by House mem­bers as well as the gen­er­al pub­lic,” said Marlo Lewis, a seni­or fel­low at the Com­pet­it­ive En­ter­prise In­sti­tute, a con­ser­vat­ive, liber­tari­an think tank. “There are a lot of people who still look at these is­sues through the memor­ies of the 1970s, and that’s a polit­ic­al real­ity.”

En­vir­on­ment and Eco­nomy Sub­com­mit­tee Chair­man John Shimkus, R-Ill., has a more nu­anced an­swer. He first de­scribed how all com­mod­it­ies, ran­ging from corn to beans to nat­ur­al gas, should be ex­por­ted without re­stric­tions. Then, he fi­nally ar­rived as his (sort of) an­swer:

“Pub­lic-policy-wise, if you want to be con­sist­ent, crude oil is a bulk com­mod­ity and you should be able to ex­port it,” Shimkus said in an in­ter­view last week. But, then the caveat comes: “I would rather the crude go to U.S. re­finer­ies to get re­fined and then ex­port the re­fined product be­cause we get double, triple the money.”

These Re­pub­lic­ans and most oth­er people in Wash­ing­ton have been caught a bit flat-footed by this de­bate, which many didn’t ex­pect to come in­to the spot­light as quickly as it has.

The House En­ergy and Com­merce Com­mit­tee is gear­ing up to re­lease a re­port on the geo­pol­it­ic­al be­ne­fits of ex­port­ing nat­ur­al gas, a top­ic that Wash­ing­ton delved in­to last year. Now, the ex­port de­bate is passing the com­mit­tee by, at least for the time be­ing.

“Give us a little while. We’re in the midst of do­ing some ana­lys­is,” Com­mit­tee Chair­man Fred Up­ton, R-Mich., told En­vir­on­ment & En­ergy Daily last week.

In­deed, this de­bate is still in its in­fancy, and politi­cians will surely evolve (polit­ic­al eu­phem­ism for “change”) their po­s­i­tions over the next year or more. In fact, Shimkus did once say that with nat­ur­al-gas ex­ports, he came around to the idea of sup­port­ing that policy change.

But nat­ur­al gas doesn’t af­fect gas­ol­ine prices. And that’s why this de­bate is dif­fer­ent — and tough­er — for Re­pub­lic­ans (and, less so, for  Demo­crats).

“To call for the re­mov­al of the crude-oil ex­port ban, even if a lot of people don’t know about it, once they hear about it, it can take on the char­ac­ter of the sac­red cow,” Lewis said. “I don’t think any­thing hav­ing to do with nat­ur­al gas and ex­port does.”

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