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Bill to repeal US crude export limits passes Senate energy committee

Washington — The US Senate Energy and Natural Resources Committee passed Thursday, in a 12-10 vote, a bill to repeal long-standing limits on US crude exports, setting up a possible full Senate vote on the export policy this fall.

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Thursday's passage increases the likelihood that the roughly 40-year-old restrictions on US crude exports could be repealed this year, if both the full House of Representatives and Senate approve legislation to do so and President Barack Obama signs it into law.

Still, that likelihood remains clouded by opposition from some Democrats and environmental interests who oppose giving US oil producers unfettered access to the world market. Every Democrat on the committee voted against the bill.

The bill, the Offshore Production and Energy National Security Act, was introduced last week by Senator Lisa Murkowski, an Alaska Republican and the committee's chairwoman. The bill would repeal all limits on US crude exports, but also calls for new lease sales in the eastern Gulf of Mexico, drilling off the coasts of Virginia, Georgia and the Carolinas, and more drilling offshore Alaska.


The bill also includes new revenue-sharing provisions, granting some states 37.5% of the proceeds from production off their coasts, and the creation of a new fund, paid for through offshore drilling proceeds, to address climate change and fund infrastructure efforts by Native American tribes.

The bill faced opposition from committee Democrats and Senator Angus King, a Maine independent, who criticized it for promoting the production of fossil fuels while doing nothing for renewable energy sources.

The bill is "totally unbalanced," said King, who called the bill the "No Fossil Fuel Left Behind Act."

The bill is "a massive giveaway to Big Oil," said Jacqueline Savitz, a vice president with Oceana, one of the several environmental groups who criticized Murkowski's bill Thursday.

In a statement, Jay Hauck, a spokesman for Consumers and Refiners United for Domestic Energy, a lobbying group fighting a change to current export policy, said the bill would "reverse" US energy independence efforts and cause gasoline prices to rise. Supporters of an end to crude limits have long disputed the impact of exports on gasoline prices and several studies have claimed a policy change could, in fact, cause gasoline prices to drop.

Senator Joe Manchin, a West Virginia Democrat, included an amendment to the bill which would allow the US president to put export limits back in place if gasoline prices increase. The president has such authority now, but Manchin wanted explicit language in the bill on this, according to Senate staff. Manchin ended up voting against Murkowski's bill due to the revenue sharing provisions in the bill.

Hauck's group represents four, independent refiners: Philadelphia Energy Solutions, Alon USA Energy, PBF Energy and Monroe Energy. Most refiners have not fought an export change publicly, but the American Fuel and Petrochemical Manufacturers, the industry's main trade group, has said any change in export policy should be coupled with changes to other policies, including the Jones Act and the Renewable Fuel Standard.

Other oil industry groups, including the American Petroleum Institute, praised Murkowski's bill Thursday.

The bill's committee passage Thursday follows comments Wednesday from House Speaker John Boehner, an Ohio Republican, backing an end to crude exports and increasing the likelihood on a House vote on crude exports this fall.

The House would most likely vote on a bill from Representative Joe Barton, a Texas Republican, to end the crude export limits. But the House Energy and Commerce Committee has not voted on the bill.

The Obama administration has indicated they will not move to change crude export policy before Obama's term ends in January 2017, leaving any possible change to Congress.

--Brian Scheid, brian.scheid@platts.com
--Edited by Valarie Jackson, valarie.jackson@platts.com