Commerce Secretary: ‘Serious Conversations’ Underway on Oil Exports

U.S. Secretary of Commerce Penny Pritzker walks up stage during the first-ever SelectUSA 2013 Investment Summit October 31, 2013 in Washington, DC. The summit is to help facilitate connections between investors and companies, both foreign and domestic, and U.S. economic development organizations.
National Journal
Ben Geman
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Ben Geman
July 3, 2014, 12:43 p.m.

Com­merce Sec­ret­ary Penny Pritzker said Thursday that her agency is grap­pling with its ap­proach to the na­tion’s dec­ades-old ban on most crude-oil ex­ports at a time when “tech­no­logy is ad­van­cing faster than the ex­ist­ing reg­u­la­tions.”

“I think it’s a mis­take to think there isn’t ser­i­ous con­ver­sa­tion go­ing on with­in the ad­min­is­tra­tion about what we should do and fig­ure out the right policy,” she said at the As­pen Ideas Fest­iv­al in re­sponse to a ques­tion about both oil and nat­ur­al-gas ex­ports, al­though her agency only reg­u­lates the former.

Pritzker’s re­marks ar­rive roughly a week after rev­el­a­tions that the Com­merce De­par­ment quietly gave two com­pan­ies a green light to ex­port ul­tr­a­light, min­im­ally pro­cessed crude oil known as con­dens­ate, rul­ing that it’s a “pet­ro­leum product” and not sub­ject to the ban.

Some ana­lysts see the de­cisions as a crack in the ex­port ban that dates back to the oil shocks of the 1970s, des­pite Obama ad­min­is­tra­tion claims that no policy shift has oc­curred.

“We do not have a change in policy des­pite what you read in the news­pa­per,” Pritzker said at the fest­iv­al. (The At­lantic, a lead spon­sor, is owned by Na­tion­al Journ­al par­ent com­pany At­lantic Me­dia.)

However, she ac­know­ledged that the na­tion’s sur­ging pro­duc­tion of light oil from shale form­a­tions is for­cing a new look at the top­ic.

“What is go­ing on is that be­cause of un­con­ven­tion­al sources — and for those of you who are law­yers in the room, you will en­joy this — what is the defin­i­tion of crude oil versus what is the defin­i­tion of a dis­tilled or re­fined product?” she said.

“That is something that we have to now look in­to more care­fully and bet­ter un­der­stand the im­plic­a­tions of this and it’s be­cause tech­no­logy is ad­van­cing faster than the ex­ist­ing reg­u­la­tions,” Pritzker said.

On Wed­nes­day, Demo­crat­ic Sens. Ed­ward Mar­key and Robert Men­en­dez sent Pritzker a let­ter de­mand­ing the leg­al ra­tionale for the re­cent ex­port ap­provals, ar­guing that the rul­ings is­sued for Pi­on­eer Nat­ur­al Re­sources and En­ter­prise Products Part­ners seem­ingly run afoul of the dec­ades-old ban.

The White House has pre­vi­ously dis­closed that an inter-agency group is ex­plor­ing the ex­port ban. In par­tic­u­lar, pro­duc­tion of light oil from re­gions in­clud­ing the Eagle Ford is sur­ging, yet many Gulf Coast re­finer­ies are con­figured to handle heav­ier grades from Venezuela, Canada, and else­where.

In As­pen, Pritzker de­clined to say wheth­er she thinks the crude-oil ex­port ban should be re­laxed and noted in­ter­agency dis­cus­sions on the top­ic.

She noted that en­ergy ex­ports over­all should be ex­amined whol­ist­ic­ally from an eco­nom­ic, stra­tegic, and dip­lo­mat­ic stand­point.

“The ques­tion is, what is the right ex­ports and what is the right amount of ex­ports? Right now we have in place a policy about oil ex­ports. There’s a policy ques­tion but there is a defin­i­tion­al ques­tion,” Pritzker said.

“So we have to spend time and in­ter­agency pro­cess to fig­ure it out, which is go­ing to oc­cur,” she said.

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