Time to end the outdated oil export ban

This editorial originally appeared in the Saturday edition of the Fairbanks Daily News-Miner.

Two important documents in the effort against the 1970s-era ban on the export of domestically produced oil came out this week, clearly showing that Sen. Lisa Murkowski of Alaska is correct in urging for its repeal.

The analysis by energy consultants IHS makes the case that the ban is a remnant of a bygone global oil market that bears little resemblance to the market of today. The United States, once a weakened oil producer, now finds itself — rather abruptly — as a rejuvenated supplier of oil.

But the nation also finds itself ill-equipped to handle this newfound crude, which is being made available through the relatively recent explosion in the practice of hydraulic fracturing, known as fracking, in some of the Lower 48 states. Fracking, in which oil-bearing formations are intentionally shattered through pressurization to release the oil, has caused a “remarkable growth trend in crude output has profound implications for U.S. and global oil markets.

The report notes that the focus of the export ban, by the time it was codified in 1979, was “very specifically on prohibiting exports to Japan of North Slope crude oil, which had begun to flow through the Trans-Alaska Pipeline in 1977.”

Any doubt about the export ban’s current lack of necessity can be wiped away, however, by looking back to 1996, when President Clinton signed legislation allowing the export of Alaska North Slope crude, although none has been imported from the state since 2004 because of economics. At the time, the Energy Department estimated that exporting oil would lead to the production of an additional 100,000 barrels daily.

So the main reason for having the export ban was eliminated years ago. It didn’t seem to matter in the ensuing years that an export ban remained on oil produced elsewhere in the nation. We weren’t producing enough of it to really matter.

The recent surge in production has brought the export ban renewed and urgent attention, particularly from Sen. Murkowski, the ranking Republican on the Senate Energy and Natural Resources Committee. Others in Congress are catching on.

The argument received a further boost on Thursday with a new report from the U.S. Energy Information Administration that included some discussion about the potential relaxing of the export law. The report made it clear that most of the increase in oil production in recent years is of a lighter type of oil and that it has in large part been used to reduce the amount of imported light oil.

But the production of light oil is only going to increase further, eventually eliminating the import of light oil and creating a domestic glut. That production will have to go somewhere if it is to continue to be produced. Refiners will need to modify their plants to process the light oil or will have to try to blend it with heavier stocks.

Or Congress and the president could authorize the wide export of the oil.

They should.

By ending the export ban, Congress and the president could achieve a few things noted in the IHS report: Increase oil production further; drive down gasoline prices by 8 to 12 cents per gallon; create anywhere from about 400,000 to 860,000 jobs; increase government revenue by up to $2.8 trillion; and increase annual gross domestic product by up to $170 billion.

Sen. Murkowski, who has emerged as a leader against the export ban, had it right this week when she said, “It’s time to reverse a policy that has far outlived its usefulness — something that would benefit the entire country.”

So let’s get on with it.