As the number of U.S. drilling rigs plummets by a third and thousands in the industry face layoffs, oil companies are focusing on persuading Congress to lift the long-standing ban on oil exports.
“We shouldn’t put domestic producers at a competitive disadvantage by limiting the available markets,” Ryan Lance, CEO of Houston-based ConocoPhillips, told the U.S. Chamber of Commerce on Tuesday.
Scott Sheffield, CEO of Irving-based Pioneer Natural Resources, was making the same push Tuesday in front of the House Subcommittee on Energy and Power, arguing that the industry’s struggles with low oil prices are worsened because companies aren’t allowed to ship American crude to foreign nations.
Worldwide oil prices have plummeted because of a supply glut driven by surging American production, which has in turn led to companies slashing costs and laying off workers. The Federal Reserve Bank of Dallas predicts that 140,000 jobs in Texas could be lost by next year as reverberations from the oil slowdown ripple throughout the state economy.
Energy companies worldwide are hurting. But the international market price, known as Brent, is $10 a barrel higher than the benchmark price for U.S. crude sales, West Texas Intermediate.
“If current trends continue and the export ban is not lifted, U.S. shale oil production will flatten or decline by disproportionate volumes versus our overseas competitors, diminishing the profound benefits of the shale revolution,” Sheffield said in prepared testimony.
Arguing against lifting the ban, though, was Delta Air Lines, which told the House energy subcommittee that allowing exports would hurt consumers by threatening to raise prices for gasoline and other fuel.
“Why would any policymaker want to risk jeopardizing the current consumer benefits we are experiencing and institute a policy that would benefit only a narrow sector of the economy?” asked Graeme Burnett, board chairman of Monroe Energy, Delta’s refining subsidiary.
The oil export ban was put in place after the 1970s Arab oil embargo, ostensibly to protect Americans from gasoline shortages and price spikes. But oil companies and energy economists argue that it’s outdated in an era of enormous U.S. oil and natural gas production.
Supporters of ending the ban argue that it wouldn’t raise gasoline prices and could even lower them.
Gas prices are tied to the global oil price, and more U.S. oil on the international market would drive down the global price, according to an analysis by the global consulting firm IHS Energy.
“It is not the case that hoarding energy supplies inside our borders helps lower prices to consumers,” said Amy Myers Jaffe, an energy economist at the University of California, Davis.