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White House called on to act on oil exports

Obama administration signals opposition to legislative action to end 1970s era ban.

By Daniel J. Graeber
White House called on to act on oil exports
Responsibility lies with the White House to overturn a ban on crude oil exports, an industry group says. Photo by tcly/Shutterstock

WASHINGTON, Sept. 16 (UPI) -- If the White House opposes legislative action to overturn a ban on oil exports, the onus is on the executive branch to take action, an industry group said.

A House energy committee pushed ahead with legislation that would end a ban on crude oil exports enacted when Arab members of the Organization of Petroleum Exporting Countries stopped shipping oil to the United States in the 1970s. In what industry supporters describe as an era of energy abundance brought on by U.S. shale oil deposits, Republican leaders in the House say U.S. policies are out of date.

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White House spokesman John Earnest said ending the ban is a matter for the Commerce Department, saying the office of President Barack Obama does not support legislative action.

Neal Kirby, a spokesman for the Independent Petroleum Association of America, said if the White House opposes such action, it should take the initiative itself.

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"The administration should then take action to allow our own, U.S. producers equal access to the same global markets that it will soon be authorizing for the Iranians," he said in response to emailed questions. "Failing to do so would be a major missed economic opportunity for both the American people and U.S. businesses."

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A report from the U.S. Energy Information Administration finds removing the ban would bring modest relief for U.S. consumers in terms of gasoline prices, already at historic lows, and lead to an increase in U.S. crude oil production of around 450,000 barrels per day by 2025.

Those in the refinery sector have expressed reservations about ending the ban. While supporters tout economic benefits and the potential for overseas leverage against Russia and potentially Iran, opponents say many of the stated benefits are overblown.

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"We have maintained all along that this is a risky policy change," Jay Hauck, executive director of the Consumers and Refiners United for Domestic Energy, said in an emailed statement. "The losers will be American consumers, businesses, and national security."

Groups like Hauck's say U.S. allies overseas need fuel, not crude oil, because many foreign refineries aren't configured to process the lighter grade of crude oil found in U.S. shale deposits.

Last year, the U.S. Bureau of Industry and Security, a division of the Commerce Department, authorized two U.S. companies, Pioneer Natural Resources and Enterprise Products Partners, to ship an ultra-light form of oil called condensate from the U.S. market. Processing steps mean condensate doesn't qualify as crude oil under the terms of U.S. law.

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In early August, the Commerce Department granted a request from Mexican energy company Petroleos Mexicanos, known also as Pemex, to swap as much as 100,000 barrels of U.S. crude oil per day for Mexican refining. The deal forbids the re-export to other nations.

A report last week from the U.S. Energy Information Administration said seasonal factors offshore and weak economics onshore are expected to lead to a decline in U.S. crude oil production. In a short-term market report, EIA said total crude oil production will decline 4.3 percent from expected full-year 2015 levels to 8.8 million bpd by 2016.

The White House spokesman suggested House leaders were putting party interests first, which he said were often aligned with those in the oil industry.

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