Oil Export Ban Dominates Hearing on Strategic Petroleum Reserve

Republican senators took advantage of a committee hearing Tuesday to further push their plan to lift the crude oil export ban, an increasingly pressing priority for the GOP. The administration, however, isn’t budging on its opposition to the idea.

Energy Secretary Ernest Moniz was ostensibly on Capitol Hill to answer questions on the modernization of the Strategic Petroleum Reserve (SPR). But he spent much of his time in front of the Senate Energy and Natural Resources Committee deflecting a barrage of questions relating to the 1970’s-era ban on crude oil exports.

Sen. John Barrasso (R-Wyo.) broached the subject first, asking Moniz why the administration seems to be “dithering when it comes to crude oil exports.”

Moniz was unwavering from the administration’s support to keep the ban in place, noting that the United States imports 7 million barrels of oil per day. “Recent studies on exports show that the impacts for the next 10 years, or so, are likely to be pretty modest in terms of exports. It’s hard to argue that there is large production being hemmed-in by current rules,” he said.

Moniz also refuted Republican assertions that the export ban is costing jobs in the oil industry. “The evidence today is that this is not occurring. The [Energy Information Administration’s] analysis says that if there was a substantially greater reduction in the U.S., something north of 12 [percent], then there might be an impact there. But right now there is not.”

Sen. Steve Daines (R-Mont.) added some historical context to the frustration over the export ban, which was implemented in 1975. “Forty years ago. It was Abba… It was the Eagles. I was in 7th grade. It was a response to an acute crisis that we had then. I would argue it’s [now] irrelevant, as we’ve moved from a scarcity environment to one of abundance.”

Moniz repeated his position. “The current global market does not seem to be, in reality, looking for that oil.”

Sen. John Hoeven (R-N.D.) paid lip service to the original point of the hearing, saying that lifting the oil export ban could lead to to a decreased reliance on the Strategic Petroleum Reserve. “We’re disadvantaged by the ban on oil exports, so if we want our domestic industry to continue to expand and grow, we need to lift the ban. If we’re allowed to compete in the global economy, we’ll have a more robust oil and gas industry in this country then if we’re not allowed to compete. With a more robust industry, we’re less dependent on escrow.”

Hoeven has been at the forefront of the Republican push to end the export ban, an effort which has been gathering momentum in recent weeks.

The House is expected to vote on a bill to lift the ban this week. The path forward in the Senate is less clear. Last week, a last-minute amendment on a export ban repeal in the Senate Banking Committee reduced the measure to veto-bait. There was talk of putting an exports ban repeal on legislation to update a 40-year-old toxic substances bill. But the toxics measure may be fast-tracked through the Senate without amendments.

The primary purpose of the hearing — to examine the modernization of the Strategic Petroleum Reserve — did get some air time. Congressional proposals to sell some of those reserves to fund a highway bill, or even a bill bolstering the National Institutes of Health, are particularly controversial. “Right now we’ve got a mindset here in this Congress that says, ‘We need this money now because we need to spend it on a transportation bill,’” said Committee Chairman Lisa Murkowski (R-Alaska). “We are looking at this as nothing more than a cash machine.”

Sen. Elizabeth Warren (D-Mass.) called the proposal to tap the SPR “a high cost gimmick,” adding, “Mandating a massive, inefficient and inflexible sell-off of the Strategic Petroleum Reserve years in advance is just one more bad idea for how to finance government.”

There was some consensus on the need for an upgrade of the reserves’ infrastructure. The Energy Department puts the total cost for needed upgrades at $2 billion. “We have a huge infrastructure issue and I don’t know how to pay for it. But I think we need to have an enormous infrastructure renewal program,” said Moniz.

Murkowski agreed, saying any future sell-off of the SPR should be set aside for infrastructure upgrades. “If there were to be a sale, the first thing to do with those proceeds is work towards modernization,” she said.

The Department of Energy is currently conducting a study on on the size and purpose of the Strategic Petroleum Reserve, which is expected to be finished in spring 2016.

Morning Consult