As reported in Energy & Environment Daily (among others), Senator Ted Cruz (R-TX) has said he would like to slip in an amendment to the upcoming Keystone XL bill which would lift the U.S. crude oil export ban-although many Republicans feel now is not the right time to have this debate.
Although lifting the 40-year-old ban on U.S. crude oil exports is a laudable goal, it is not one that should be pursued in isolation – and certainly not as an amendment to another major piece of energy policy legislation like the Keystone XL bill.
The question of U.S. crude oil exports is something that must be viewed as part of a bigger policy picture. For example, allowing U.S. crude to be exported abroad will hurt the domestic U.S. refiners – because the Jones Act is still in place. Whatever sense this archaic law made when it was enacted in the 1920s, makes no sense today.
As a result of this legislation, it would cost $2-$3 per barrel to ship U.S. crude from the Gulf across the Atlantic to European refineries, as opposed to $5-$6 per barrel to ship it on a Jones Act ship to a Northeast refinery in the U.S. This $3 per barrel cost difference is equivalent to a seven-cent-per-gallon product price difference, which is more than enough for foreign refiners to process that crude and sell the gasoline back to the Northeast U.S. for less cost than our refiners would incur.
Another reason against adding an export ban-related amendment to the Keystone XL bill is far more straightforward. We should not be making a decision on something as important as lifting the U.S. crude export ban as a mere amendment to another bill. The export debate is not a topic many lawmakers wish to discuss right now, and to rush to a debate on it so soon would be a distraction to the main issue at hand, namely Keystone XL. Plus, the issue of fallout must be considered: would a failure to pass a Keystone XL bill with a crude export amendment be seen as a blow to lifting the crude oil export ban, as well as Keystone?
The upcoming Keystone XL bill debate is neither the time nor the place to discuss lifting the U.S. crude oil export ban. That needs to form part of a much larger debate on America’s free market energy policy. A free market should drive America’s energy policy, but right now that free market does not exist.