US awash with oil but coy on exports

OIL producers are enthusiastic about capitalising on the shale energy boom by exporting newly abundant US crude.

OIL producers are enthusiastic about capitalising on the shale energy boom by exporting newly abundant US crude. Some refiners and many politicians in Washington are not.

That there is even a debate on easing or ending the 40-year-old near-total ban on US crude oil exports is a remarkable turnabout for the US's energy situation, where dependence on foreign oil has been a key driver of policies in several presidential administrations.

The resolution of the debate carries important implications on the profit potential of exporters and the ability to avoid a production glut that could slow the shale boom.

Lifting the ban, which dates to the Arab oil embargo of 1973, should be simple in theory. The law allows limited export licences and President Barack Obama could order the Commerce Department to loosen the rules for granting them. Or congress could vote to overturn the ban altogether.

But neither step is likely this year, say members of congress from both sides of the aisle. The reason most commonly given is "energy security", and the notion that increasing exports could undermine the country's ability to reduce reliance on foreign oil.

Another explanation is that in a mid-term election year no politician wants to be blamed if prices go up no matter the reason. These dynamics mean the restrictions on US crude oil exports are likely to last for a while longer.

"This entire discussion has come up too quickly for Washington to get its arms around it, and certainly for congressional Republicans," said Stephen Brown, a spokesman for Tesoro , a major refiner that says it supports lifting the ban in the context of wider changes to energy regulations that would give refiners more flexibility to move their product around the country.

But proponents of increased exports are not likely to go away. The American Petroleum Institute, which represents oil and gas companies, as well as some politicians and energy analysts, say times have changed, putting the US on pace to become the world's top producer by 2015, according to the International Energy Agency.

The US is already stepping up exports of refined petroleum products, which are not restricted, but producers would like the option of exporting crude as well.

"We are in an era of energy abundance, not energy scarcity," said Jack Gerard, president of the American Petroleum Institute, which lobbies for oil and gas companies in Washington.

The energy industry has some support for its position from at least one independent, non-partisan body. The IEA said on Tuesday that surging US production could hit a wall if the export ban stays in place, making additional production less economically attractive.

The growing volumes "that cannot leave North America are increasingly posing a challenge to industry", the report said.

Republican senator Lisa Murkowski of Alaska has called for the crude export ban to be lifted, following a similar call by Exxon Mobil in December. And Energy Secretary Ernest Moniz said a number of energy policies were decades old and should be revisited.

But Several Republican politicians are lukewarm about lifting the crude export ban, which has helped keep energy prices low. They include Ed Whitfield of Kentucky and Doug Lamborn of Colorado, who are chairmen of energy-related congressional subcommittees.

Mr Lamborn said during a recent House hearing that discussion of oil exports is "premature". "Let me be clear, I support free trade," he said. "I also support American energy independence and that is a road that we are on, but we are still far from our goal."

Democratic senator Ed Markey of Massachusetts said: "If we overturn decades of law and send our oil to China and other markets, oil companies might make more money per barrel, but it will be American consumers and our national security that will pay the price."