American Oil and Gas Reporter - January 2016 - 26

Federal Legislation

Ban Lifted On U.S. Crude Oil Exports
By Del Torkelson
WASHINGTON-When President Obama in mid-December signed Congress'
$1.8 trillion spending measure, the Consolidated Appropriations Act of 2016,
the Independent Petroleum Association of
America and its allies achieved one of their
top legislative goals: The statutory restrictions that constrained U.S. crude oil exports since Gerald Ford's presidency were
no more. For the first time in four decades,
U.S. producers will be allowed to sell their
oil across the globe.
The House of Representatives approved the omnibus spending bill 316-113,
while the Senate passed it 65-33. IPAA
Senior Vice President of Government
Relations and Political Affairs Dan Naatz
maintains that U.S. oil and gas producers
are not the only winners. "Giving the United States the ability to export its oil
across the globe allows it to be an energy
superpower," he reflects. "It is good for international stability when a liberal democracy has some of that influence, instead of
allowing Russia and Middle Eastern countries to hold all the cards."
A host of industry advocates have
touted that upside and more, citing benefits that include a stronger U.S. economy,
less imbalance between U.S. and foreign
crude grades, and even the likelihood of
slightly lower gasoline prices.
In a statement, U.S. Senator John
Cornyn, R-Tx., affirms, "Ending the ban
on crude oil exports will serve as a shot in
the arm to a sluggish economy, and will
open new markets for job creators in
Texas and across the country. By making
American energy available to the world
market, we also will help our allies abroad
diversify their resources and enhance
their security. Lifting the antiquated ban
is a win-win, and I applaud the bipartisan
support for this pro-growth strategy."
Not to be forgotten, however, is the
matter of evenhandedness. According
to published reports, Domestic Energy
Producers Alliance Chairman Harold
Hamm highlighted that consideration
throughout many Capitol Hill conversations by pointing out that the United
States banned overseas exports for only
two other products besides crude oil: unprocessed Western red cedar and live
horses for slaughter.
"It is a straight-up question of fairness,"
Naatz concurs. "Based on that, the policy probably never should have been instituted."
26 THE AMERICAN OIL & GAS REPORTER

But, he continues, even those who appreciate the concerns that originally
prompted Congress to pursue the ban after the 1973 Arab oil embargo must also
recognize that conditions in 2016 are dramatically different. "The situation
changed long ago," Naatz reflects. "The
industry has changed, the technology has
evolved, and our country is in the midst
of an energy renaissance. The ban was a
throwback, an artificial constraint on a
specific product that really made no
sense."
Ending the prohibition was something
of a "no-brainer," he surmises. "But in
Washington," he reflects, "even a nobrainer takes a lot of work."
The Merits And Politics
In his remarks at the Liaison Committee of Cooperating Oil & Gas Association
meeting in New Orleans in early November, Naatz predicted the omnibus spending package could provide a legislative vehicle for U.S. oil exports, but he also urged
industry advocates not to put all their figurative eggs into a single basket (AOGR,
December 2015, pg. 105).
With the export measure's passage,
however, Naatz acknowledges how tall an
order it would have proven in 2016. "I
don't ever want to put an ultimatum on
anything, but it was important to pass this
legislation when we did because it gets that
much harder to pass anything the closer the
calendar gets to November of a presidential election year," he admits.
As he ponders how elected officials
overcame such concerns, Naatz credits as
helpful the ideological diversity of those
who agreed the United States should allow oil exports, offering as an example
support from Leon Panetta, who served as
President Bill Clinton's chief of staff and
as Obama's former secretary of defense
and Central Intelligence Agency director.
Export backers highlighted such support
in an effort to protect crude exports from
the type of partisan polarization that organized around subjects such as the Keystone
XL Pipeline.
"Neither side would budge on Keystone, regardless of facts or arguments,"
Naatz reflects. "From the get-go on crude
exports, we worked with Democrats."
One-Sided?
Naatz acknowledges a perception that
the GOP gave more than it got on the omnibus bill. Published reports quote House
Democratic leader Representative Nancy

Pelosi, D-Ca., as saying Republicans
"wanted 'big oil' so much that they gave
away the store."
Along those lines, even as it lauds a legislative end to the export ban, the American Energy Alliance decries the extent to
which the omnibus bill extends tax credits for alternative energy sources and
funds a number of Obama administration
regulatory priorities.
"Eliminating the ban on oil exports is
an important policy that will benefit the
economy in the long run, but Republican
leadership paid too high a price, capitulating on nearly every demand from the left,"
characterizes AEA President Thomas
Pyle. "Extending corporate handouts to the
wind and solar industry will cost taxpayers tens of billions of dollars and hike electricity prices on middle class Americans,
all while putting a down payment on Obama's climate agenda."
However, Naatz says, although IPAA
takes no position for or against renewable
energy tax credits, he notes that Senate
Minority Leader Harry Reid, D-Nv., was
pushing to make them permanent. The legislation extends them for five years, but
the crude export ban has no scheduled return.
Moreover, Naatz continues, although
earlier versions of the omnibus included
a number of other measures also important to energy producers, such as riders that
sought to freeze the Obama administration's efforts to implement its Clean Power Plan and its redefinition of "waters of
the United States" subject to the Clean Water Act, those items probably were longshots in Republicans' legislative opening
bid that never were very likely to survive
negotiations.
"Negotiations always were going to be
tough with this legislation," Naatz reasons.
"Senator Reid was not going to simply roll
over. I don't know how realistic it was to
put them in an omnibus bill that anyone
expected the president to sign. The president's point of view is well known. If we
went after climate change items, he might
not sign that bill."
Indeed, press accounts indicated in December that Obama killed a pair of Congressional Review Act resolutions Congress passed late in 2015 to block the
Clean Power Plan's greenhouse gas restrictions for both new and existing power
plants (see Congress Turns To SPR For
Revenue," AOGR, December 2015, pg.
28). Obama announced he would not
sign the bills before he left for his holiday

American Oil and Gas Reporter - January 2016

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