A panel at the 23rd World Petroleum Congress said President Joe Biden's administration should resist growing pressure from lawmakers to reinstate a federal ban on crude oil exports that was lifted in 2015.
With the recent spike in gasoline prices, at least 11 US senators have appealed to the Biden administration to reinstate the ban, believing it would relieve domestic inflationary pressures.
“The whole idea here is that they believe that by repurposing this ban, we would be lowering American gas prices. Of course, everyone in this audience knows the exact opposite would occur,” American Petroleum Institute chief executive Mike Sommers told the panel on the role of US oil and gas in global energy markets.
“Taking 3 million barrels off of the world market in this price environment would have disastrous effects.”
Since the federal ban on crude oil exports was lifted in 2015, the US has become one of the world’s export powerhouses. The other panelists agreed that an interventionist approach could hurt the US economy and contribute to global instability.
Hess chief executive John Hess said advocates of reinstating the ban fail to understand that the US still imports oil at a “world price” to use for gasoline.
Taking US crude off the market would push those prices up, while causing West Texas Intermediate crude prices to plummet, he suggested, ultimately putting industry jobs and investment at risk.
“What would it do to consumers? It would make gasoline prices go up, it would have the exact opposite effect of what they're trying to affect,” he said.
“We're talking about inflation being one of the greatest economic challenges that we face in the next year and maybe the next three years. I think it would only add to inflation and America would be to blame.”
Sommers said US oil and gas production remains underfunded as a result of the economic downturn and the effects of the Covid-19 pandemic, but he also questioned some of the messages emanating from Washington, D.C., since Biden’s inauguration in January.
“If you start an administration by saying you’re going to cancel the Keystone XL pipeline, if you continue your administration by pausing the leasing of permitting on federal lands and waters, you cancel exploration in the Alaska National Wildlife Refuge, and then also continue with a budget that... increases taxes on the oil and gas industry in the United States… of course there’s not going to be the type of investment you need,” he said.
Hess said any moves to curb offshore production in the Gulf of Mexico would be of particular concern, given moves to halt lease sales.
The Permian basin, he said, can be the “growth engine for the country” for several more years, but its production will eventually flatten out.
“We're heartened by the fact that approximately $190 million was spent in the last sale (in November), thanks in large part to (API’s) efforts to bring some sanity with the administration (arguing) that we have to keep having these sales,” Hess said.
“At the end of the day the Gulf of Mexico, I think, has some growth and we certainly hope we're part of that.”