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 As Washington mulls reversing the ban amid a drilling boom that
has swamped the U.S. Gulf Coast in oil, Texan lawmakers are already
preparing for the prospect of crude oil exports from the state's
major ports, and assessing what it means for constituents.
Even representatives of districts that include large oil refineries,
the owners of which have expressed strong opposition to exports for
fear it would increase the price of crude, told Reuters that they
would support the shipment of oil overseas.
Their views represent a shift in the national discussion over crude
exports in which elected officials increasingly acknowledge the
likelihood that some of the United States' abundant reserves of oil
will eventually find its way overseas for the first time since the
1970s. Already this year, the U.S. government has issued licenses to
allow two companies to export ultra light crude oil known as
condensate.
At stake is not just the state of the U.S. market where growing
volumes of oil are logjammed without an outlet. Supporters of
exports also see it as a powerful political tool abroad as Europe
seeks greater independence from Russian energy and violence spreads
across the Middle East.
"The decades old ban on crude oil exports is no longer justified
given the current market conditions," said Representative Michael
McCaul, the Republican who in April introduced the Crude Oil Export
Act which proposes an end to oil export limits. "Lifting the ban
will also give America a new foreign policy tool to provide greater
stability in the world oil market."
Alongside McCaul, a growing chorus of Texas representatives say that
a middle ground can be met between refiners who wish to maintain
profits by limiting exports, and producers who favor unlimited
markets for their crude.
Much opposition to exports remains, especially among refining
interests who see their profits threatened. Others would like to see
only limited volumes shipped overseas. But since the U.S. government
began quietly issuing export permits for condensate earlier this
year, many anticipate that full exports will soon become a reality.
Borrowing the Bluebell Ice Cream slogan, Republican Representative
Randy Weber from Texas' coastal 14th district which includes Shell's
Motiva refinery in Port Arthur, said: "Let's use all we can and sell
the rest."
"I am a free market kind of guy. A rising tide raises all ships," he
said.
Even though exporting crude oil could hamper growth of the U.S.
refining industry, it will promote free trade and lower gasoline
prices, said Representative Blake Farenthold of Texas' 27th
district, home to several oil refineries. Republican Farenthold is
co-sponsor on the Crude Oil Export Act.
"Do you vote for what is good for your district and your
constituents or what is good for your country? I am going with the
country on this," he said.
FREE MARKET
Texas' position is unique in the oil export debate. Its southern
coast is home to some of the world's largest oil refineries that
turn crude piped from across the continent into gasoline and other
products that can be exported under current law.
Inland, however, lie some of the United States' oldest and most
prolific oil fields that have been reinvigorated by new drilling
techniques including fracking. In those plays, producers favor the
export of crude oil.
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Oil producers want to open up their product to global markets, while
refiners fear that they could lose money if oil prices rise or could
lose share of the refining market if oil can be processed cheaper
overseas.
Crude oil production in the United States is now at a 30-year high.
Refiners whose facilities are largely geared toward processing heavy
crudes imported from Latin America and Canada are now inundated with
light crude from new drilling frontiers like North Dakota. Updating
refineries to process light crudes could take years. Much of the
debate in Texas revolves around that dilemma.
"Shell and Exxon support export, but refiners like Valero could end
up paying more for the crude oil," said Gene Green, the Democrat
representative from Texas' 29th congressional district in east
Houston that has a number of oil refineries. "If you are in a
producing region, things might be different."
Green has called for a wait-and-see approach on exports, in part to
be sure that an oil production boom in the United States is here to
stay.
"I want to take it one step at a time," he said. "I am not just for
throwing the door open to exports."
STORM BREWS
While the debate might be changing, opposition to exports is
expected and it could be years before the ban is fully lifted.
Refiners and consumer groups are lobbying against more exports,
hoping to keep the glut of oil at home.
In a Sept. 4 letter, the Consumers and Refiners United for Domestic
Energy (CRUDE) lobbying group urged the U.S. Commerce Department to
stop issuing licenses to export condensate. Such licenses, it said,
are "contrary to the letter and intent of the law."
Moreover, lobbyist sources said that an anti-export campaign could
gather steam this autumn, led by CRUDE.
On the other side, pro-exporters including oil producers like Conoco
Phillips and Continental Resources are expected to push for an end
to the ban.
All the while, lawmakers are treading carefully, especially ahead of
the U.S. midterm elections in November.
"We need to make sure it is done in a systematic way," said
Republican Representative John Culberson from Texas' 7th district,
in west Houston. "We need to take care of Americans' needs first."
(Reporting by Edward McAllister; additional reporting by Valerie
Volcovici in Washington; Editing by Marguerita Choy)
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