Bipartisan US lawmakers urge White House to end talk of crude export ban

Urging the White House to end consideration of a US crude export ban, a bipartisan group of lawmakers said reimposing the restrictions would increase US gasoline prices, curb domestic production, restrict global supply and pose other serious economic threats.

The four Democrats and four Republicans in the House of Representatives detailed the potential unintended market impacts in a Dec. 9 letter to President Joe Biden.

"If your Administration is seeking solutions to reduce the price of U.S. gasoline, a crude oil export ban is not the remedy," the letter said. "In fact, imposing such a ban will most likely make the situation far worse, as many of the existing studies have shown."

Biden administration officials have repeatedly said that reimposing restrictions on US crude exports remains among the many "tools in the toolbox" being studied in response to high US fuel costs.

White House officials talked for weeks about the possibility of releasing oil from the Strategic Petroleum Reserve to calm prices before actually tapping the stockpile.

While analysts do not think any changes to US crude export policy are imminent, the risks grow as the administration tries to tackle inflation and energy costs ahead of the November 2022 mid-term elections.

Congress lifted crude export restrictions in December 2015, which fueled a Permian Basin drilling spree and a buildout of pipelines and terminals on the Gulf Coast.

The US exported 2.67 million b/d of crude in September, about 25% of domestic production, according to the most recent Energy Information Administration data. The exports averaged 3.2 million b/d in 2020, an all-time high.

Politics versus economics

Kevin Book, managing director of ClearView Energy Partners, said the White House's National Economic Council has likely looked at export restrictions when generating ideas for responding to high prices. He said after executing their first choice for a market intervention -- the SPR drawdown -- "there's still a political problem to solve."

"Now, how seriously they pursue it has a lot to do with the economic realities of the moment and the politics of the next election," Book said.

Book called it a "jawbone White House," that vets issues publicly for a number of reasons.

"This is a White House that knows that markets look at information and make decisions about future outcomes based on information today," he said. "This is a White House that brandishes the SPR for months before pulling the trigger, because they can jawbone speculative, long interest."

Book said publicly vetting the export ban considerations could be asking in a "tacit, veiled way for producers to produce more," without angering environmentalists who want to end US fossil fuel development.

Frank Maisano, senior principal for Bracewell, said the lawmakers behind the letter are "worried this is something the White House would consider because progressives are pushing it. And the White House staff seems to be moving in that direction because they don't really understand how oil markets work and how complex they are."

Calls to limit gas exports

Some Democrats in Congress have likewise urged the Biden administration to limit LNG exports in response to high natural gas prices and climate concerns.

Environmentalists have stepped up opposition to US LNG export facilities, backing restrictive legislation in the US House of Representatives, as well as protesting a pending export authorization at the US Department of Energy.

Legislation introduced Dec. 7 by Representative Jan Schakowsky, Democrat-Illinois, and Nanette Diaz Barragán, Democrat-California, would bar the Federal Energy Regulatory Commission from approving new LNG terminals unless doing so would also cut greenhouse gas emissions.

It would also prohibit hydraulic fracturing, ban exports of crude oil and natural gas, and bar new GHG emissions from all new power plants.

Senator Elizabeth Warren, Democrat-Massachusetts, Nov. 23 called out US oil and gas companies' high level of LNG exports at a time of elevated natural gas prices.

In response to her letters querying oil and gas companies about their levels of exports and profits, EQT President and CEO Toby Rice wrote back to say that if the US wants to lead on climate change it needs more LNG and pipeline infrastructure, along with more gas production.