The U.S. virtually banned the export of crude oil in the wake of the
mid-1970s energy crisis. But as America pumps more crude, 2014 could be
the year those constraints are lifted.
For decades, even discussing the possibility of exporting
domestic oil was a nonstarter in Washington. Now, surging U.S.
production has led to the beginning of a glut along the Gulf Coast, home
to the largest refinery complex in the world. Too much crude is driving
down prices, making producers eager to export oil to places like Europe
where prices are higher.
Signs that the industry would challenge the export
restrictions began appearing in the final months of 2013, with the
American Petroleum Institute, the oil industry's main lobbying group in
Washington, saying it was looking to end the ban. Last month, Ken Cohen,
vice president of public and government affairs at Exxon Mobil Corp.,
the nation's biggest energy company, said it was time to rethink the
prohibition.
U.S. Energy Secretary Ernest Moniz made a similar overture,
remarking that the export prohibition dated from a time of energy
scarcity.
Even as the first trial balloons were floated, politicians began to fight back.
"Easing this ban might be a win for Big Oil, but it would hurt
American consumers," Sen. Robert Menendez, (D., N.J.) wrote the
president. "Crude oil that is produced in the U.S. should be used to
lower prices here at home, not sent to the other side of the world."
Some backers of ending the ban already argue that it would
improve the trade deficit, experts say, while opponents will press for
keeping oil at home with a goal of reducing dependence on Middle East
production. Others will maintain that allowing exports would be bad for
the environment.
"I think it will be a huge knockdown fight, because it pits
environmentalists against national security hawks against producers
against consumers," said Michael Webber, deputy director of the Energy
Institute at the University of Texas. "It's a cage match for a
multi-hundred billion dollar market."
Crude production is suddenly surging, mostly from shale
formations in Texas and North Dakota. Plunging oil prices could slow the
boom. But the Energy Information Administration forecasts crude
production will rise by 24% to 9.6 million barrels a day by 2019,
breaking the U.S. record set in 1970.
If the export restriction causes -- or appears to be about to
cause -- problems, such as layoffs of energy workers, Congress might
move quickly, said Jason Bordoff, a former senior energy adviser to
President Barack Obama.
An actual change in the law is likely to take time. But given
the confluence of politics with energy production and price pressures,
2014 "is likely to be a year where we seriously talk about oil exports,"
said Kevin Book, managing director at ClearView Energy Partners LLC, a
Washington, D.C., political advisory firm.