Crude oil exports are one of the hottest topics in energy today. Many experts predicted this would be the number one topic in 2015, and thus far, it is an early frontrunner for Energy Issue of the Year. Recently, U.S. Senator Heidi Heitkamp (ND-D) spoke out against a policy she publically stated the restrictions on crude oil is “wrong, wrong, wrong on so many levels.”
According to Heitkamp, the limitations on exportation is a policy stemming from the Richard Nixon administration in response to a number of producers going around price oil support controls.
“This is a 1970’s policy,” Heitkamp said. “Unfortunately when we transitioned away from price supports for crude oil we never removed this restriction.That was a mistake at this time and it continue to be a colossal mistake for our growth towards energy independence in this country and our ability to use our energy and our oil for soft power.”
She continued explaining the broad phrase “soft power” by indicating the opening of oil exports will create a consistent supply of crude oil to the United State’s allies so they do not have to do business with terrorist groups or frictional countries like Iran and Russia.
“It is critically important that we examine some of the concerns I think that people have about lifting the embargo,” Heitkamp said. “Obviously North Dakota, we don’t’ see any logic because we are kind of a common sense state. We don’t see any logic behind not allowing crude oil to be exported, but allowing every refined product that we could produce in this country access to a foreign market. That makes absolutely no sense.”
Heitkamp then questioned whether the logic behind the crude oil restriction actually was working to keep gasoline prices down..
“If the logic behind this is to try and maintain stability and a lower gasoline price, then we should lock down gasoline. We shouldn’t export gasoline,” Heitkamp said.
Heitkamp addressed domestic policy and concerns, which impacts the price of gasoline. To help explain the complex export culture, Heitkamp went across the political aisle for context and support.
“I have to applaud Senator Murkowski (AK-R) because very early on she heard that and said let’s have some real intellectual work done,” Heitkamp said. “Let’s get economists from Brookings and the Aspen Institute, economists from all over the country who have come to one single conclusion, which is it will not raise gasoline prices. In fact the conclusion is quite the opposite.”
Heitkamp alluded to the Bakken as one of the shale plays to lead the removal of the crude oil restriction due to the resource’s sweet nature. In fact, September 2014, Heitkamp and John Hess, the CEO of Hess Corporation, appeared together on CNBC’s Squawk Box where they talked about the need to lift the ban.
“The crude we produce in North Dakota is light sweet crude. We don’t have a big refining capacity for light sweet crudes so we have a price reduction in our country,” Heitkamp said. “Gasoline prices are based on that higher crude oil price.”
Under the current regulation, United States is importing crude oil from places like Saudi Arabia and Venezuela in order to meet consumer demand. Heitkamp said the prices the U.S. is paying for the imported oil, but some would point to the current price creep as an example of more uncontrollable elements in a restricted market.
She added there are also some who wish to keep the current captive market with crude oil exports. Heitkamp has a pretty basic and easy answer when encountered with that side of the argument.
“I have a lot of hog farmers in North Dakota who like low corn prices. The solution for low corn prices has never been to not export corn,” Heitkamp said. “This is the only commodity that is traded on a global price that doesn’t have the ability to find its market.”
She believes the recent energy production from the U.S. actually motivated Iran to come to the negotiating table and talk.
“They saw we could infiltrate the markets and take market share. That’s threatening to a lot of former OPEC countries who are wanting that captive market,” Heitkamp said.
Reiterating the importance of energy and the economy, Heitkamp said many of the United State’s foreign enemies rely on oil revenue to fund their “terrorist activities” and their governments who supply the services to keep them in operational.
“We have an opportunity to say to our allies, whether it is in Japan or in Europe, don’t’ worry about whether somebody is going to hold you hostage because you won’t be able to heat your home in the winter or provide gasoline to communities and consumers. Don’t worry about that, because, we’ve got your back.”
Heitkamp said it is difficult to have their back if the Unites States doesn’t begin exporting crude oil.
“The bottom line is on that every level, in terms of foreign policy, in terms of what we should be in this country, on every level, a policy on maintaining an embargo, a restriction against exports of crude oil makes no common sense. Absolutely none.” Heitkamp said.