Oil industry may challenge U.S. export ban

The U.S. oil industry, riding a domestic energy boom, is preparing to challenge restrictions on crude exports, possibly by arguing that limits designed to keep petroleum in America may violate international trade rules.

“Export issues are something we’re going to have to address,” John Felmy, the chief economist for the American Petroleum Institute trade group said in an interview. “It’s a debate we have to have.”

He declined to discuss lobbying strategy or trade rules, though a June planning document on API letterhead obtained by Bloomberg News says the group has begun to develop “the necessary legal analysis” to support export approvals.

API is planning to “highlight potential violations of the World Trade Organization rules against export restrictions,” according to the draft document, prepared for the group’s executive committee meeting.

Industry officials say the push is just starting to lift the 1970s-era restrictions, and they acknowledge it will be an uphill fight that raises sensitive political issues. The U.S. is producing more oil than it has in nearly a quarter-century, though, reducing its reliance on imports and putting the nation closer to energy independence than it has been since 1989, according to the Energy Information Administration.

Reid Porter, a spokesman for the Washington-based group, said he wouldn’t comment on specific strategies, though he confirmed the group supports lifting export restrictions.

“Supporting the free market and supporting open trade is a key priority for our industry,” Porter said. “It creates efficiencies, creates jobs, and increases revenue to our government.”

The document indicates that the industry is more focused on protecting tax breaks as Congress considers a tax-code overhaul than on export restrictions. The organization spent about $6.7 million on lobbying for the first nine months of the year, according to public documents.

Still, removing trade restrictions is rising on the industry’s list of priorities as U.S. production soars, said Stephen Brown, vice president and counsel for federal government affairs at Tesoro Corp., a San Antonio-based oil refiner that is not a member of API.

“It’s time it gets a full airing,” Brown said in an interview.

The push represents a shift in the U.S. energy policy that since the oil embargo imposed by Arab nations in the 1970s has focused on reducing imports from places like Venezuela and Russia. The U.S. still imported about 11 million barrels a day of crude oil and refined products in 2012.

Advances in techniques such as hydraulic fracturing, known as fracking, and horizontal drilling have sparked a boom in production. The International Energy Agency in Paris predicted last year that the U.S. would overtake Saudi Arabia by 2020 as the world’s largest producer.

Constraints on crude oil exports date to the 1975 Energy Policy and Conservation Act, enacted in the wake of the Arab oil embargo.

With few exceptions, that measure prohibits exports unless the U.S. Commerce Department finds those shipments to be “consistent with the national interest.”

The restrictions apply to crude oil, not refined gasoline or related products.

The U.S. exported about 2.6 million barrels of refined petroleum products a day in 2012, more than double what it exported in 2007, according to EIA data.

Wichita Eagle