Economists Push for Crude Exports

Jennifer A. Dlouhy

WASHINGTON — Free-market economists are launching an initiative to tout the promise of crude exports on Thursday, buttressing separate campaigns by oil companies and their allies on Capitol Hill.

With a website, papers and analysis, the new “Unlock Crude Exports” campaign aims to convince policymakers in the White House and Congress that it’s time to dismantle the 39-year-old ban on selling most U.S. oil overseas.

Margo Thorning, senior vice president of the American Council for Capital Formation that is funding the campaign, said the change would allow the United States to capitalize on its “energy advantages” as a domestic drilling boom sends oil production to near-record levels.

“I don’t see any logical reason to ban a product that we have in abundance,” she said in an interview. “We are now a world-class energy producer, and we have such an abundance, it makes no sense to forbid exports. It’d be like forbidding the export of wheat or corn or automobiles.”

Thorning said the initiative is designed to be a kind of clearinghouse “for good information” about oil exports, including a host of studies issued this year that predict selling crude overseas would lift its domestic price while lowering gasoline costs.

“Our mission is going to be to help people inside the Beltway, politicians and editorial boards . . . understand how beneficial it will be both economically for the U.S. and in our relationships with other countries,” she said.

The move comes a week after 14 independent oil companies formed their own coalition to lobby lawmakers and the Obama administration to lift the 1970s-era export ban.

Oil producers who have been clamoring for access to foreign markets say the deluge of light, sweet crude now flowing from U.S. wells threatens to overwhelm domestic refiners geared toward heavier varieties. They also hope unleashing U.S. oil on the world market will lift its price, removing the discount for domestic West Texas Intermediate crude compared to the international Brent crude benchmark.

Some industry leaders and energy analysts have warned that without changes, the country could reach a “day of reckoning” when U.S. production exceeds refining capacity, prompting even bigger domestic discounts for crude and spurring companies to lay down drilling rigs and halt new investments.

Countering that, refiners insist the doomsday predictions are exaggerated, because the sector still has openings for domestic, light, sweet crude and can add even more capacity to absorb those U.S. supplies.

Relatively few lawmakers have taken a position on the issue — a political hot potato any time, but especially leading up to next week’s mid-term elections. And, after the Commerce Department eased the way for two companies to export treated condensate, an ultra-light oil, earlier this year, the Obama administration has held off on making similar declarations for other firms.

Thorning predicted lawmakers will move more aggressively on the issue next year, after a new Congress has been sworn in.

One incentive, she said, could be bolstering the U.S. economy amid European and Chinese slowdowns that curb demand for American goods. Orders for durable goods slowed in September, according to Commerce Department data released Tuesday.

“With slowing growth in Europe and the slowing of Chinese growth, all of that is going to affect our growth here, and our exports,” she said. “I think smart politicians would be looking for positive levers that they could pull here in the U.S. to help us withstand a global slowdown in growth. Certainly, producing gas and crude oil (would be) helpful.”