LIFTING THE BAN: YES

The US Is Already Exporting Petroleum, But Who Profits?

In October 2011, the Domestic Energy Producers Alliance put a stake in the ground and predicted American energy independence by 2020. America’s independent oil and gas producers have unlocked the technology and resources that make this a reality. As a result, we can today mark the recent 40th anniversary of the OPEC oil embargo by ending the era of energy scarcity in America and, along with it, ending the last of shortsighted regulations passed during that period.

Thankfully, in response to dramatic changes in our global energy industry, legislators have repealed nearly all post-embargo regulations save two: the Energy Policy and Conservation Act of 1975 and the Export Administration Act of 1979, which essentially ban crude oil exports. As the world has changed and other similar, post-embargo legislation has been phased out, the question has to be asked, “Why does the U.S., a nation historically very supportive of free trade, continue to impose export barriers for domestic crude oil and natural gas?”

The popular belief is that we're not exporting petroleum. Nothing could be further from the truth. Major oil companies export refined petroleum products like gasoline and diesel with no limitations. Why shouldn't independent producers be allowed to do the same? This would be like telling American farmers they can't export their wheat, yet allowing Pillsbury to export all the flour it wants. It’s disingenuous for the government to ban exports of crude oil, yet allow exports of gasoline, diesel and propane. By imposing trade re- strictions on a single segment of the energy industry, our government is arbitrarily subsidizing refineries by giving them the ability to buy American oil at artificially low prices yet sell petroleum products into higher-priced global markets. In fact, the U.S. is exporting 4 million barrels per day of refined petroleum products.

So it isn’t a question of whether we should allow petroleum exports—we already are. The real question is why should one link in the chain benefit arbitrarily from distortions caused by laws restricting free commerce?

When you consider the potential for job creation, it really puts these distortions into perspective. Refining doesn’t create jobs. Once a refinery is built, it takes the same number of employees to run it at 75% of capacity as it does at 100%. Jobs can only be added through the upstream industry. At a time when U.S. unemployment sits at nearly 7% and, more importantly, U.S. labor force participation has fallen to just 63%, unconventional upstream oil and natural gas activity has added jobs for millions of Americans—both directly and indirectly through energy service and equipment companies. It has also served as a job multiplier for our nation’s growing chemical and manufacturing industries.

Lifting export regulations would enable our domestic oil exploration and production industry to achieve its full potential, boosting job growth at home and oil supply around the world; the latter of which improves global refined product balances that ultimately translate to lower gas prices in the U.S. According to a recent American Petroleum Institute study, U.S. oil exports could save American consumers $5.8 billion annually.

Beyond its economic benefits, supporting domestic oil and natural gas production is vital for our national security. Energy independence doesn't mean being isolationist. As we've seen in Cuba, Venezuela and North Korea, closed societies don't work. Energy independence means energy security. It means a chance for America to step back into a global leadership role by creating a world of balanced interdependency as opposed to dysfunctional interdependency. And it means no one can choke off supply, turn off the tap or otherwise distort the market.

This is particularly relevant today, as Russia has occupied recent headlines with its aggressive actions in the Crimean Peninsula. Some have said U.S. LNG exports to Europe may be used to counter Russia’s threats. However, while opening LNG exports is a noble goal and one that our country is actively working toward, the fact is the infrastructure to undertake large-scale overnight LNG exports does not currently exist. While Russian gas displacement with U.S. LNG may not yet be achievable, crude oil exports are possible immediately and may be used as a diplomatic tool to weaken the influence of our geopolitical adversaries.

If we are to be an energy leader this century, we can’t continue to hide behind a crude oil export ban. America’s greatest economic and diplomatic tool is oil exports, which could be utilized today if the export ban were repealed.--Harold Hamm

LIFTING THE BAN: NO

American Workers And Consumers Stand To Gain The Most If Domestic Crude Remains At Home

As the U.S. increases its oil production for the first time in decades, a debate has been brewing on whether lifting the ban on crude oil exports is good for the country and American consumers. While oil interests advocate sending U.S. crude overseas, it’s clear that prohibition on crude exports plays an important role in allowing the U.S. to increase energy independence, benefiting consumers and creating jobs for American workers. Lifting the ban will send a precious natural resource into a market dominated by OPEC, which means job losses, growing dependence on foreign oil and that Americans will pay higher prices at the pump.

To illustrate the impact of crude oil production on jobs, just take a look at the last few decades. The U.S. Energy Information Administration (EIA) reports that the number of operable refineries in the U.S. decreased from 301 in 1982 to just 143 at the beginning of 2013, causing the elimination of thousands of jobs nationwide.

Two and a half years ago, ConocoPhillips and Sunoco announced that they were closing their respective Pennsylvania refineries in Trainer, Philadelphia and Marcus Hook. Over 2,300 high-paying direct jobs and tens of thousands of lucrative indirect jobs were suddenly at risk. These facilities were losing millions of dollars per week, making their continued operation nonviable.

But today the situation in Pennsylvania has changed dramatically. The purchase of one facility, a partnership for another, and the changing business model of the third has infused new life into these assets. The renewed viability of each of these facilities comes from a common element: They each embraced and were emboldened by the new domestic energy revolution. As a result, the long-term outlook of these facilities and others throughout the U.S.—and their employees and communities—is much brighter.

In addition to saving jobs, the growth in domestic crude production helps the U.S. on a pathway toward energy independence and security. In January, the EIA released its final oil import numbers, which showed a decrease from 3.9 billion barrels in 2012 to 3.5 billion barrels in 2013—a reduction directly related to increased oil production at home. While this is encouraging, any steps toward sending domestic oil overseas, when we are still relying heavily on foreign imports, will ensure that we never become energy independent.

Despite claims by export proponents of a "mismatch" between production and refining capacity, every single barrel of crude oil produced in the U.S. today can be refined in the U.S. U.S. refineries have the capacity to handle additional U.S.-produced crude and are bringing new projects to process lighter crude oil on line at a rapid pace. Logistics shortcomings, which in the past impeded utilization of domestic crudes at some refineries, are being addressed—companies have made substantial investments to construct logistics facilities which will get domestic crude to U.S. refineries that want it. Philadelphia-area refineries and petroleum logistics companies have invested over $500 million in crude-by-rail facilities in just the past two years. These facilities bring hundreds of thousands of barrels of domestic crude into the region by rail every day, and there are plans for further expansion.

American workers and consumers stand to gain the most if domestic crude remains at home. Lower crude prices benefit American families, businesses and the overall economy by lowering the cost of gasoline, propane, heating oil and other petroleum products. Consumers benefit from the lower cost of crude because refiners are passing on approximately $3 per barrel of their savings. Based on a data analysis by Barclays Plc, “the U.S. consumer is currently benefitting from discounted crudes in the form of cheaper gasoline prices.” This translates to a savings of 7 cents per gallon of gas, which ultimately resulted in annual savings of more than $9.5 billion last year, and an expected $9.6 billion of savings this year.

At a time when we are making progress toward energy independence and security, lifting the ban on crude exports is counterintuitive and harmful. Exports of U.S. crude will subvert our energy independence, increase domestic crude and gasoline prices,and make us even more beholden to foreign regimes. As Jonathan Chanis of the Council on Foreign Relations said, “… markets for petroleum are distorted by the practices of Saudi Arabia and the Organization for Petroleum Exporting Countries.” As such, the global crude market is anything but free. For these reasons, we need to keep U.S. crude in the U.S.--Jeff Warmann

Through its subsidiary, Monroe Energy LLC, Delta Air Lines Inc. in 2012 purchased the Trainer refinery complex from Phillips 66. Monroe shifted the product slate at the complex to maximize production of jet fuel, and supplies products to Delta and other parties.