Energy guru Dan Yergin does not see US politicians taking action to remove the country’s ban on oil exports ahead of upcoming mid-term elections but said there is a growing consensus in the capital to tackle the issue in 2015.
"This is the hottest oil and gas question in Washington right now,” Yergin said.
The US ban on crude exports has been in place for four decades after being enacted in response to the oil shocks of the 1970s.
Yergin, who is vice chairman of consultancy IHS and a noted oil scholar, called the ban “an archaeological remnant” and pointed out that similar bans on exports of natural gas and refined products were lifted in 1981.
“In an election year it will be difficult but all the turmoil in the world is putting the focus on eliminating restrictions on exports,” Yergin said, pointing to unrest in major energy producing countries like Iraq and Libya and key transit hubs like Ukraine.
IHS recently completed a study claiming that world gasoline prices would decline and 1 million jobs would be created in the US if the ban were lifted because it would prevent the US from becoming over-supplied with crude and avert a price decline.
“There are very positive gains not only economically in terms of jobs and economic growth but in terms of politics and stability,” he said.
One big question is exactly how the ban will be lifted and whether Congress might seek a back-door solution that would avoid an outright vote on the topic.
Most of the increase in US liquids production has come in the form of “light tight” oil that is of such light gravity that it borders on condensate.
Certain extremely light grades are currently exportable if they are created as a result of the refining process but they are not exportable if they are naturally produced at the wellhead.
One possible course of action that has been floated in Washington is a change in the wording of those regulations that would allow ultra-light grades produced at the wellhead to be exported without a full repeal of the ban itself.
Such a change could likely be done administratively and would spare legislators from voting on an issue that might be unpopular with voters.
Yergin declined to weigh in on which path politicians might follow but stood by his conviction that the US would begin crude exports in the next few years.
“There is a gathering consensus the more people look at it that says this just doesn’t make sense,” he said. “The US has a tremendous opportunity right now, why damage it?”