Sen. Lisa Murkowski (R-AK), Ranking Republican on the Senate Energy and Natural Resources Committee, last week released another of her “Energy 20/20” white papers entitled, “A Signal to the World: Renovating the Architecture of U.S. Energy Exports.” The paper reviews current federal energy export policies on everything from crude oil to nuclear power and comes at a time when policymakers in Washington are beginning to review the policies, many of which are decades old and may not reflect recent technological and energy production advancements in the United States.
Though the paper provided commentary on a range of energy exports, policymakers and energy producers were most interested in the paper’s examination of U.S. crude oil and liquefied natural gas (LNG) exports.
With regard to the export of crude oil (and related condensates), Murkowski’s white paper argues that the domestic crude market is irrationally constrained while prices are set on a global scale, which creates market distortions and harms consumers. She further suggests that the major growth of U.S. crude oil production in the Bakken, Eagle Ford, and other fields has been in light, sweet crude, which many current U.S. refineries are not equipped to accommodate, and that the growth in production may “exceed not only the nation’s light refining capacity, but also the ability of refiners to adapt to the new production slate.”
The paper recommends that the de facto ban on crude exports be lifted and recommends a variety of alternatives to achieve this. First, the paper argues that “the President may also simply make a national interest determination that the present regulatory structure, which generally prohibits crude oil exports, is unnecessary and counter-productive.” She further suggests that the U.S. Commerce Department already retains the statutory authority to lift the ban and cites a CRS memo that states the ban could be lifted “for compelling economic or technological reasons that are beyond the control of the applicant, the crude oil cannot reasonably be marketed in the United States.” Should the administration not move forward to approve crude oil exports, the paper states, “then the Senate should update the law to reflect 21st-century conditions.”
Murkowski is not alone on the Senate Energy and Natural Resources Committee in favoring a review of current energy export policies, particularly those relating to crude oil. Sen. Mary Landrieu (D-LA), currently the third most senior Democrat on the committee and who is poised to ascend to its Chairmanship this spring due to committee leadership changes triggered by the likely retirement of Sen. Max Baucus (D-MT), this week said that the administration should reexamine the ban on crude exports, stating, “We need to relook at it because the whole world has changed in terms of domestic energy production both in gas and oil and it’s important for our policies to be updated.” Murkowski and Landrieu, as the top two senators on the Energy and Natural Resources Committee, would form a powerful duo on the issue.
Adding fuel to the fire were U.S. Energy Secretary Ernest Moniz’s comments late last year suggesting that the U.S. revisit its oil export ban. Taken together, it is no longer beyond the realm of possibility that the ban on crude exports will continue indefinitely. Federal policymakers are engaging on the issue and staking out positions that may have ramifications for decades to come.
Murkowski’s paper also criticized the U.S. Department of Energy’s (DOE’s) review of LNG exports, stating that the LNG export market “is proceeding far too slowly under the Department of Energy’s watch,” calling the review process for LNG export to non-Free Trade Agreement countries “onerous.” The paper recommends DOE “expedite its review process for applications to export LNG to non-FTA countries” and that federal environmental reviews of natural gas export projects “should not include potential climate change impacts.”
The House Energy and Commerce Committee has also announced plans to release a broad-ranging report on LNG exports later this month. The report is intended to accelerate LNG export policy discussions both in congress and within the administration. The report will reflect information gathered through a number of the Committee’s hearings and forums held throughout 2013.