Moniz stands his ground against crude exports

Source: Geof Koss, E&E reporter • Posted: Wednesday, October 7, 2015

Congressional support for repealing the ban on crude oil exports may be growing, but Energy Secretary Ernest Moniz remains a skeptic.

In an appearance before the Senate Energy and Natural Resources Committee today, Moniz was pressed by Sen. John Barrasso (R-Wyo.) on why the administration is “dithering” on crude exports when it has taken steps to approve natural gas exports.

Moniz drew a distinction between the two commodities.

“In natural gas, we are of course — I mean, we with some Canadian imports, although those have gone down, too — we are essentially self-sufficient, and our export, we’ll very shortly start the exports with [liquefied natural gas] out of the Lower 48,” he said. “With oil, it’s still very different where we are a 7-million-barrel-a-day importer of crude oil, a much greater exporter now of oil products, of course.”

Asked by Barrasso whether zero crude imports is the administration’s litmus test for supporting exports, Moniz said no, but noted that the United States is already exporting about 4 million barrels of refined product a day to South America and Europe.

“So they are getting the benefit of our increased production,” Moniz said, addressing a key argument of export backers — that shipping U.S. energy supplies abroad boosts the energy security of allies.

Moniz also took on another argument of export supporters by casting doubt that U.S. production is being constrained by export restrictions.

“The fact is that, and when you look at spreads, Brent, WTI, Louisiana light, it’s hard to argue that there’s been a lot of production being hemmed in by current rules,” he said, referencing the global benchmark Brent crude, and West Texas Intermediate, the light sweet crude flowing from the domestic energy boom.

But Barrasso countered that hemmed-in production “means jobs lost in the United States in the oil industry for people that are actually out there working, trying to, you know, make a living, put food on the table. So it is — it is a consideration for our economy.”

Citing his own U.S. Energy Information Administration data, Moniz responded that U.S. production would have to be “substantially greater” to have an impact. “But right now, the evidence does not suggest a major impact,” he said.

While the hearing ostensibly was about modernizing the Strategic Petroleum Reserve, committee members came back to crude exports time and time again.

Sen. Steve Daines (R-Mont.) pressed Moniz on the need for keeping a policy enacted nearly four decades ago, noting that Sen. Tom Cotton (R-Ark.) wasn’t even born when the ban was signed.

“I was in seventh grade, but it was a response to an acute crisis that we had, certainly,” Daines said.

Moniz reiterated that the Commerce Department, not the Department of Energy, has authority over crude exports but again cited EIA projections that lifting the ban would have little practical impact.

“I go back to the fact that the EIA analysis certainly shows, certainly in anything like today’s and projected markets, rather small impact of whether that’s in place or not,” he said.

After several exchanges with Daines on why the United States has such a ban, Moniz finally pointed out the obvious. “Well, it’s the law,” he said.

Daines in turn noted that Congress “is the body that makes laws and can change the law, and I hope we can get the White House to work with us here to remove that ban.”

Moniz’s testimony before the Senate Energy panel comes ahead of a House vote later this week on legislation (H.R. 702) to repeal the ban, which is expected to pass the lower chamber but faces uncertain prospects on the other side of the Capitol.