Former Obama Officials Say Oil Export Ban Hurts U.S. Credibility

(Bloomberg) — Two former Obama administration officials
said a four-decade-old ban on oil exports limits U.S.
geopolitical influence and makes it harder to get other nations
to embrace free trade.

The issue of the ban “arose constantly” in negotiations
with other countries, including when the U.S. sought support for
sanctions on Iran’s oil production to halt its nuclear
ambitions, said Carlos Pascual, a former top energy envoy at the
U.S. State Department.

“It’s those kinds of restrictions that in the end affect
American credibility, and in the moment when we have to put
through an important policy, makes it much more difficult to
negotiate,” Pascual said at a Senate Energy and Natural
Resources Committee hearing Thursday called to build support for
ending the ban in place since the 1970s Arab oil embargo.

Despite a lobbying push by drillers, and steep job losses
in the oil fields tied to a plunge in crude prices, there’s been
no significant effort in Congress to lift the ban. Some oil
refiners, who benefit from low prices, oppose ending the ban.

Pascual said in the drive for international support of
penalties on Iran, Indian and Turkish officials questioned where
they’d get crude to replace the supplies threatened by
sanctions.

Murkowski Bill

The U.S. succeeded in showing both governments why it was
in their national interest to diversify their sources beyond
Iran, but “it was not an easy negotiation,” said Pascual, now
senior vice president for energy and international affairs at
IHS Inc., a consultancy, and a former ambassador to Mexico and
Ukraine.

Senator Lisa Murkowski, an Alaska Republican and committee
chairman, is writing legislation to end the ban as a way to
encourage continued oil development in the U.S. as prices fall
and companies begin to cut back.

While proponents of ending the export restrictions say
doing so will lower U.S. gasoline prices by adding to the global
oil supplies, the hearing largely focused on the effect the ban
has on energy geopolitics.

Ending the ban “is beneficial to the markets for
efficiency, for pricing and also in sending a message of support
on the importance of free trade” said Elizabeth Rosenberg, a
former senior adviser at the Treasury Department under President
Barack Obama.

Rosenberg is the director of the energy, economics and
security program at the Center for a New American Security, a
Washington-based group that examines national security issues.

Jeff Warmann, the chief executive officer of Monroe Energy
LLC, the refining arm of Delta Air Lines Inc., said lawmakers
should leave the restrictions in place.

The drop in fuel prices as U.S. production has increased
has provided a “jolt to the economy,” Warmann said.

To contact the reporter on this story:
Jim Snyder in Washington at
jsnyder24@bloomberg.net

To contact the editors responsible for this story:
Jon Morgan at
jmorgan97@bloomberg.net
Steve Geimann

About BloombergNEF

BloombergNEF (BNEF), Bloomberg’s primary research service, covers clean energy, advanced transport, digital industry, innovative materials and commodities. We help corporate strategy, finance and policy professionals navigate change and generate opportunities.

Available online, on mobile and on the Terminal, BNEF is powered by Bloomberg’s global network of 19,000 employees in 176 locations, reporting 5,000 news stories a day.
 
Sign up for our free weekly newsletter →

Want to learn how we help our clients put it all together? Contact us