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Fri January 24, 2014
Potential for Gas Price Increase If Oil Ban Lifted
For forty years the U-S has banned the export of most all crude oil. Matt Laslo reports a new debate is raging in Washington over whether to end the ban.
MATT LASLO: The U-S banned crude oil exports after the Arab oil embargo of 1973. It’s been in place since, which has negatively impacted global oil prices. Wyoming Republican Senator John Barrasso says he’s ready to lift the ban.
JOHN BARRASSO: “I’m supportive of exporting American energy, exploring for more American energy. But we’re exporting coal from Wyoming, we want to export more natural gas, as well as additional petroleum products.”
LASLO: Barrasso says the ban on crude oil exports is hurting the U-S during this modern day energy boon.
BARRASSO: “That means producing more and obviously if we’re selling that abroad that helps us as a nation with our balance of payments and then we wouldn’t be sending hundreds of billions of dollars overseas.”
LASLO: Others in Wyoming aren’t sold on the idea of lifting the crude oil export ban. Among them...Congresswoman Cynthia Lummis.
CYNTHIA LUMMIS: “I am an advocate quite frankly for natural gas exports because we have such a tremendous glut of natural gas and the price is so low it discourages exploration.”
LASLO: Lummis says it’s a different picture with crude oil because the U-S still imports more than forty percent of its oil from overseas – often from countries with a volatile political and military landscape.
LUMMIS: “We all know that we’re still importing gas from other countries. We also know that we have natural gas wells shut in because of the glut in natural gas. So as I look at it I am much more concerned about trying to stimulate the price of natural gas while providing export opportunities for the natural gas community.”
LASLO: As for the impact on Wyoming producers if the ban is lifted? Bruce Hinchey, the president of the Petroleum Association of Wyoming, says states like Texas, Louisiana and Alaska stand to gain the most.
BRUCE HINCHEY: “We’re not close to any ports so to export it’s going to have to go along way, and there’s other crude closer to ports to export than us.”
LASLO: Academics largely agree. Tim Considine is a professor of Energy Economics at the University of Wyoming.
TIM CONSODINE: “Well, it’s a mixed bag. For Wyoming oil producers prices could be higher, and for refiners their crude and liquids would be a bit more expensive.”
LASLO: But Considine says over all it will help spur economic growth.
CONSODINE: “You’re allowing markets to sort all this out. And free trade – everyone benefits from free trade in the end when it’s all said and done. There will be winners and losers but on net it’s a win for the U.S. economy.”
LASLO: The million – or more accurately, Billion – dollar question is ‘what will this mean for you when you fill up your tank?’ Charles Mason is a petroleum professor at the University of Wyoming. He says consumers may be the losers as gas prices go up.
CHARLES MASON: “You can’t make an omelet without breaking some eggs.”
LASLO: But Mason says the price increase he’s predicting will merely “get lost in the background noise.”
MASON: “So if I’m right and crude oil goes up a little but not a lot, maybe $5? You’ll probably see a 15 cent increase in the price of gas.”
LASLO: While the debate over ending the export ban on crude oil continues to pit some Republicans against other Republicans, they’re still unified in one thing: opposing the Obama administration. Senator Barrasso says administration efforts are hampering the U-S energy economy.
BARRASSO: “I think we have such incredible resources in the United States and we’re being held back by the Obama Administration policies from really exploring for additional sources of energy that we know are there. And we ought to be doing that. First it would help our economy, it would help with jobs. The taxes on the energy being sold from overseas would help at home.”
LASLO: And Congresswoman Lummis says while the debate over the export ban has popped up in policy circles, she isn’t really hearing about it from energy producers and refiners back home.
LUMMIS: “Now their main concern legislatively is that tax reform might change the way that they can recover their costs of production. I hear frequently about regulations that are stifling their ability to produce oil and gas.”
LASLO: Efforts to unwind regulations and to overhaul the tax code remain stalled in this hyper partisan Congress, but the debate over the crude ban is now bubbling here in Washington. While experts say it’s unlikely to be ended any time soon, it’s become the talk of this town.
For Wyoming Public Radio, I’m Matt Laslo in Washington.