Former Obama aide backs end of US crude oil export ban

Post Thumbnail

If the US ban on oil exports is lifted, the only losers would be refiners that are now benefiting from crude prices cheaper than the global benchmark, said Larry Summers, President Barack Obama’s former economic adviser.

In an unconditional endorsement yesterday of ending the decades-long export ban, Summers said few public policy changes would hold such obvious benefits.

Allowing more exports would lower gasoline prices, according to an analysis by the Brookings Institution, a Washington-based research group that analyzes national public policy. Summers, a former US Treasury secretary and now president emeritus of Harvard University, agreed drivers would pay less at the pump, and he said billions of dollars of additional investment would be added to the economy if the export ban ended.

“I don’t really understand who the losers are who are very important,” Summers said at a Brookings event in Washington.

His remarks and the report from Brookings add support for exports beyond the oil industry lobbyists who’ve argued removing the ban is the best way to ensure the US energy renaissance continues. That probably won’t change the political dynamics immediately, said Jeff Navin, a former deputy chief of staff at the US Energy Department.

“The general public, and therefore a good number of elected officials, are skeptical in terms of what lifting the ban will mean for gasoline prices and the economy,” said Navin, who is co-founder of Boundary Stone Partners, a Washington-based consultancy. “If you’re going to see any real movement in terms of lifting the ban, these basic questions about energy prices and economic impact have to be addressed.”

While some members of Congress support allowing overseas sales, including Senator Lisa Murkowski, an Alaska Republican, legislation to overturn the ban hasn’t advanced. Others, such as Senator Ed Markey, a Massachusetts Democrat, have said more exports could raise gas prices at home and keep the US overly dependent on foreign oil.

Summers said the law gives Obama the authority to bypass Congress and end the restriction himself if he judged doing so to be in the nation’s interest. He declined to predict whether Obama would lift the ban, which was put in place by Congress in 1975 in response to the Arab oil embargo two years before.

For four decades, the crude export ban was of little consequence. Domestic production was falling as producers like Irving, Texas-based Exxon Mobil Corp. looked overseas for easier-to-reach reserves.

The advent of horizontal drilling and hydraulic fracturing, or fracking, in which drillers shoot water, sand and chemicals underground to break up rock and free trapped oil and gas, reversed the trend. Production is now at its highest point since 1987, though imports still account for about a third of US daily consumption.

The U.S. energy renaissance has prompted companies awash with crude to seek new markets. Supporters say without them, drilling will decline.

Brookings said in its report that oil production in the Gulf Coast alone could increase as much as 1.5 million barrels a day if exports were allowed. The added oil to the global market could reduce gasoline prices 7 cents to 12 cents a gallon, Brookings said.