Congress Is Trying To Lift The Oil Export Ban. This Is Why They Will Fail.

Lifting the oil export ban would increase fracking in the United States, experts say. CREDIT: AP PHOTO/CHARLIE RIEDEL
Lifting the oil export ban would increase fracking in the United States, experts say. CREDIT: AP PHOTO/CHARLIE RIEDEL

This week, the House of Representatives will consider — and likely pass — a bill to repeal a 40-year-old ban on exporting crude oil. But some environmental groups say the repeal is a giveaway to oil companies that will bolster production and increase carbon emissions worldwide.

“This is definitely heading in the wrong direction,” Radha Adhar, a federal policy representative for the Sierra Club, told ThinkProgress.

While it seems to have sprung from nowhere, the repeal is the product of heavy campaigning from the oil industry, low oil prices, and an American fracking boom. The crude oil export ban has its roots in oil prices. When it was enacted in the 1970s, America was reeling from an oil embargo, and protecting every drop of our precious fuel from the global market seemed like a good idea. Now, the global price of oil has plummeted — and economists don’t see it bouncing back anytime soon. Meanwhile, due to developments in hydraulic fracturing, or fracking, oil producers have flooded the market, pushing U.S. prices even lower than the global price.

World and U.S. prices of oil are expected to converge if the export ban is repealed.
World and U.S. prices of oil are expected to converge if the export ban is repealed.

The benefits of repeal are up for debate. Supporters, such as Sen. Heidi Heitkamp (D-ND) and Sen. Lisa Murkowski (R-AK), who co-sponsored the Senate bill and have ties to the oil industry, say it will lower prices for consumers and benefit the economy.

But that’s not quite what the federal Energy Information Administration found in its study on the ban released this month. According to EIA analysis, if the ban were repealed, petroleum prices for the general American public would either slightly decrease (at higher domestic production levels) or remain the same (at current levels).

The American public has some issues with the repeal. A poll from last year found that more than 80 percent of Americans thought we should use our oil here, not export it. This broad consensus could spell trouble for the senators trying to repeal the ban.

“They do not have the votes,” Adhar said. “The perception is that this will raise gas prices.”

American refineries would certainly suffer. Margins for domestic oil processing would decline, in the face of competition from overseas refineries. (The ban applies only to crude — i.e., unprocessed — oil, and the government has already loosened that restriction in some arenas, such as exports to Canada and product-swapping with Mexico. In addition, lightly processed petroleum can also be exported.) United Steelworkers, whose 1.2 million workers and retirees come largely from the metals, mining, and manufacturing industries, including refineries, strongly opposes the repeal, and said that not only would it stifle the American oil processing industry and move the country away from independence, it would also put American oil in the hands of less-regulated processors.

Processing oil overseas could have its own environmental consequences, Rory Houseman, a spokesman for the Steelworkers, told ThinkProgress.

“Our members have done everything they can to comply with federal regulations on clean air,” Houseman said. “One of the reasons they have been able to afford that is the oil export ban.”

But the greater environmental travesty might be simply moving in the wrong direction on carbon emissions. What everyone seems to agree on is that repealing the bill will lead to more drilling in the United States, and that would likely decrease oil prices globally.

This is definitely heading in the wrong direction

According to a report from the Center for American Progress, repealing the ban would result in an additional 515 million metric tons of carbon pollution each year — roughly equal to 108 million more passenger cars or 135 coal-fired power plants.

Decreasing oil prices may sound good to many consumers — but it doesn’t to most environmentalists. There is a clear link between oil (and gas) prices and consumption. The less fossil fuels cost, the more we use them.

A study out of University of California, Berkeley found that gas subsidies created economic inefficiencies. (Ironically, the researcher considered the United States an “outlier,” because subsidies here are on the production side, which benefits companies, not consumers. That is not necessarily an argument for continuing them.) Transportation makes up nearly a third of America’s carbon emissions, and natural gas — billed as a clean energy source by some — has been linked to massive amounts of methane added to the atmosphere, and has raised significant concerns about groundwater.

That is to say that, broadly, fossil fuel subsidies are not good for the climate. The International Monetary Fund found that worldwide, governments spend some $5.3 trillion a year in hidden costs for fossil fuels — including subsidies and transferred costs. Meanwhile, back in the United States, legislators are vehemently resisting attempts to estimate how much it actually costs us to ruin the planet.

Unnecessarily lowering the price of fossil fuels also has negative effects on developing clean energy.

One recent study found that adoption of energy storage — seen as a key piece in developing a renewable energy grid — is affected by natural gas prices. At low prices, storage suffers.

The big argument against wind and solar — that they are too expensive — has become less and less true. In many places, the cost of electricity from renewable resources equals or is even lower than the cost of fossil fuel.

It has been suggested that the oil industry will barter its support for an extension of renewable energy tax credits for a repeal of the ban, but opponents are skeptical that would be enough to garner the senate votes needed.

The Sierra Club, at least, isn’t taking the bait.

“Sierra Club is not engaging in conversation to negotiate the crude export ban for something we think congress has to do anyways,” Adhar said.

And if Heitkamp and Murkowski do manage to usher their bill through, it still might not become law. President Obama has already threatened to veto it.