The end to oil export ban is a measure that could sign a new era within the energy policy of the United States, which could move from being a leading-importer country within the world energy market to become one of the main world exporters of gasoline and biofuels. On the issue, the Republican-led Congress and the Democratic Presidential Administration are deeply divided.
On July 29, the Speaker of the House of Representatives, John Boehner, urged to repeal a 40-year-old restriction on the export of biofuels in order to take advantage of the energy bonanza the United States is experiencing since the start of the exploitation of shale and oil gas.
According to Speaker Boehner, the lift of the ban on energy export, about which a proper bill has already been introduced in the House of Representatives last February, would help create about 1 million domestic jobs. It will also lower gasoline prices and eager allies to the United States of the European Union to lessen dependence on energy supplies from Russia.
If approved, the lift of the ban on energy export would close an era started with the trade restrictions that the Presidential Administration of Richard Nixon approved to react to Arab Oil Embargo in the early 70's.
By considering the beginning of the so called "shale revolution" and the constantly high oil production in Alaska, US energy producers and traders urged both the Congress and the Presidential Administration to allow the export of gas and oil abroad.
In particular, energy lobbies noticed the opportunity to start exporting liquefied gas and oil towards important countries allied to the United States which are heavily dependent on energy supplies from Arab countries and Russia, such as South Korea, Japan and the European Union.
Along with its importance on the energy point of view, the proposal of Speaker Boehner, a Republican of Ohio, renewed a debate on energy issues within the House of Representatives. 97 Republican and 13 Democratic co-sponsors have already declared themselves to be in favor of the bill.
In the Senate, the bill is backed by 14 Republican senators headed by Lisa Murkowski of Alaska, the Chairwoman of the Energy Committee, and only two Democrats. On the other hand, some Democrats headed by the top Democrat on the Energy Committee, Maria Cantwell of Washington State, oppose the bill because of environmental concerns, as, in their opinion, the lift of the ban would increase the volume of crude oil shipped by rail along the country.
Along with Congress Democrats, the Presidential Administration seems not to support any bill lifting the ban on energy exports. US President Barack Obama, a Democrat, recently presented a plan to reduce greenhouse emissions: a measure which de facto goes to the opposite direction than the one proposed by Speaker Boehner, Congress Republicans and centrist Democrats regarding the lift of the ban on energy export.
Asia/Pacific vs Europe within the priorities of US energy policy
Moreover, divergences between the pro-bill front within the Congress and the Obama Administration are also tied to the destination of energy exports which, eventually, would been renewed after more than 40 years.
One the one hand, Republicans and centrist Democrats support the immediate export of energy to countries of the European Union heavily dependent on Russia gas and oil supplies. This position is deeply tied to the project of former Indiana Senator Richard Lugar, a Republican who argued the need to create a "NATO of energy" in order to secure energy dependence of the countries of the Trans Atlantic Community.
On the other hand, while reaching the first pre-agreements on the export of shale liquefied gas, the Obama Administration privileged allies to the United States in the Asia/Pacific, such as South Korea, India, Japan, Taiwan and Singapore. With the exception of the UK, no negotiation has been started with any country of the European Union.
The lift of the ban on energy exports also involved candidates to both Democratic and Republican primaries. On the Republican side, former Florida Governor Jeb Bush, Wisconsin Governor Scott Walker and Florida Senator Marco Rubio endorsed the proposal of Speaker Boehner by dismissing the ban on energy export as antiquated.
On the other side of the aisle, former State Secretary Hillary Clinton, the front-runner within the Democratic primary, did not take a clear position on the issue, probably according to her need to balance her ideological support to the lift of the ban with the position of President Obama and liberal Democrats.
The debate on the Keystone XL gains momentum again
Finally, the proposed lift of the ban on energy export re-opened the debate over the Keystone XL pipeline, a TransCanada corporation project conceived to carry crude sand oil from oil sands in the Canadian state of Alberta to Texas through Montana, North Dakota, South Dakota, Nebraska, Illinois, Missouri and Louisiana.
Republicans and centrist Democrats within the Congress support the realization of the Keystone XL because it would create new jobs. The realization of the Keystone XL would also drop oil import from Arab States and Venezuela, and strengthen political and energy partnership with Canada as well.
Otherwise, liberal democrats oppose the pipeline because they argue more oil imports would raise gasoline prices within the US market.
Last February, President Obama vetoed a resolution by the Congress in favor of the realization of the Keystone XL pipeline. However, the Republican majority on the Congress said it aims to pass a new bill to repeal the Presidential veto on the issue.
Matteo Cazzulani
Strategy XXI
