Citing the value of U.S. agriculture exports as an example, a panel of energy and financial experts on Wednesday delivered a bipartisan call to lift the nation's ban on crude oil exports before the House Agriculture Committee.
Committee Chair Rep. K. Michael Conaway (R-TX), who has authored HR 2369 to lift the ban, called the 40-year oil export ban "an antiquated relic that is disturbing global energy markets, reducing domestic employment and slowing U.S. economic growth."
The pro-export panel included Continental Resources Inc. CEO Harold Hamm, Texas Railroad Commission Chairman David Porter, CME Group Executive Chairman Terrence Duffy, North Dakota Petroleum Council Vice President Kari Cutting, IHS Inc. Senior Director Jamie Webster, and Frank Rusco, director for natural resource and environment at the U.S. Government Accountability Office (GAO).
Hamm, whose company is one of the biggest operators in the Bakken Shale, said the shale was an "American energy renaissance" and a phenomenon that will shape the next 50 years for the United States, riding the technology advances in horizontal drilling. Because of these technology advances, "the world is moving from a concept of resource scarcity to one of resource abundance.”
Hamm assured the congressional representatives that the infrastructure is in place to take advantage of a lifting of the export ban almost immediately, while Duffy and the Rusco said the re-emergence of U.S. oil exports should not drive up domestic prices. Since 2008, the U.S. production of crude oil and liquids has doubled, and it can double again by 2025 with the lifting of the ban, according to Hamm.
U.S. Sen. Lisa Murkowski (R-AK) also has introduced legislation to lift the ban (S. 1278) and boost production in her state, and various third parties, such as IHS, have said the exports would boost the U.S. economy (see Shale Daily, May 30;May 13).
Presenters mentioned the potential glitch of U.S. refining capacity constraints, noting no major new refinery has been built in the United States since 1975, but they agreed that the advent of U.S. exports longer term could help get more capacity constructed. In response to questions from committee members, Hamm said that the United States currently is using about 94% of its refining capacity.
"Banning U.S. crude exports punishes the U.S. economy with price distortions," Duffy said. "And the United States is a global leader in financial markets, and commodity markets perform best when there is a clear, transparent and readily available supply used to price markets." Adding U.S. exports would greatly expand the supplies used for global oil pricing, he emphasized.
GAO's analysis released last September concluded that removing the export ban "could reduce domestic fuel prices and enhance security by expanding the nation's strategic petroleum reserves," Rusco said. Exports would remove some global "price penalties" on U.S. crude supplies and stimulate additional production, he said.
If the ban remains, it would harm the nation’s economy, said Porter, who oversee the country’s largest oil production. “In Texas, we understand and experience firsthand the link between U.S. oil and natural gas production and the strength of the economy. The two are inextricably linked.
"When oil prices recently dropped, we felt the economic impacts at home," Porter said. "We saw thousands of hardworking men and women put out of work and rigs idled. We saw state revenues, used to support schools and infrastructure investments, decline.”
Now is the "time for a paradigm shift in mindset from energy scarcity to one of energy abundance that includes lifting the ban on crude exports," said Cutting, who noted that North Dakota has had "an amazing story to tell" regarding oil/gas development's positive impact on her state's agriculture industry.
In response to a committee member's question, Duffy said there would be an "immediate" positive reaction in global markets to the lifting of the oil export ban. "If as Mr. Hamm [and Webster] reiterated, that this could add 1% to the annual U.S. GDP [gross domestic product], that is the most compelling thing this Congress should understand.”