Oil exports bill sails through House panel

WASHINGTON — A House subcommittee swiftly approved legislation authorizing crude exports on Thursday, putting off the most divisive fights for later.

The Energy and Power Subcommittee approved the bill by voice vote, the first step in a process that could get the measure before the full House this month.

But first, lawmakers supporting the legislation hope to work through some thorny issues — including whether to craft safeguards for refiners who worry exports would obliterate a discount that has made U.S. oil as much as $30 per barrel cheaper than the European benchmark, Brent crude.

Thursday’s business meeting revealed stark divisions between Democrats and Republicans on the panel, with Rep. Kathy Castor, D-Fla., insisting promised consumer benefits from oil exports are “entirely unsupported” and Rep. Frank Pallone decrying the whole idea as a “payday for producers.”

“Before permanently dismantling our nation’s ability to restrict oil exports,” Congress should address the potential impacts on consumers, refinery capacity, associated jobs and the environment, said Pallone, D-N.J. “I don’t believe the potential impacts of (this bill) can be considered acceptable.”

Republicans broadly supported the legislation, saying exports would give the U.S. valuable political leverage around the world and bring economic benefits to oil producers as well as American consumers who could see modest gasoline savings, according to several studies.

At least two Democrats — Bobby Rush of Illinois and Gene Green of Houston — said they need to see changes before they can support the bill. They outlined hopes for an approach that would combine protections for consumers and domestic refiners with any move to unleash oil exports.

Related story: Houston rep Gene Green in spotlight as House panel tackles oil exports

Rush said he was willing to work on compromise language with the bill sponsor, Rep. Joe Barton, R-Ennis.

“While I am not able to support (the bill) at this moment, my office has been working … to see if we can come up with a proposal that I am comfortable with that would warrant my support for lifting the ban,” Rush said.

But Rush also complained the whole effort was moving too quickly and made a plea for Congress to spend more time evaluating the issue.

Green, who has constituents from both upstream oil producers and downstream refining interests in his Houston Ship Channel district, said he was open to exports, but described his fear that if U.S. companies can widely sell crude to refiners around the world, it could undermine the domestic refining sector.

“I don’t want to become just a resource nation and lose the downstream and processing jobs we have,” Green said. “I’m open to working on the exports issue, but we have to create policy that not only reflects the least 30 years but also looks into the next 30 years.”

Green said he wanted to see negotiations yield “commonsense legislation that will not just benefit producers but benefit everybody along the supply line, including the consumer.”

Possible deals could include language in a Senate bill that would specifically authorize the president to impose restrictions (such as case-by-case licensing) on oil exports in certain cases, such as when there are national security threats, emergencies or price spikes.

Green said he is interested in preserving some role for the Department of Commerce to restrict exports if they are not in the United States’ national interest, possibly including during scenarios such as if “somebody is going to build a refinery in northern Mexico and then send their gas back to us.”

The Commerce Department already has a role vetting some proposed oil exports on a case-by-case basis.

Although the 40-year-old trade restrictions block most crude exports, some oil extracted in Alaska and California can be sold to foreign buyers. Shipments to Canada are allowed under licenses, and the Commerce Department just OKed transactions to swap light U.S. oil for heavier Mexican crude.

Read more: Obama administration OKs oil exports to Mexico

Gasoline and other refined petroleum products are unaffected by the oil export restrictions; they can be freely sold overseas.

Barton’s bill would essentially put raw, unprocessed crude on the same legal footing as refined petroleum products, explicitly barring any federal government official from imposing restrictions on oil exports.

Barton said he is willing to negotiate in the hopes of drawing more Democratic support. The bill already has 14 Democratic cosponsors. And late Wednesday, the Blue Dog Coalition of fiscally conservative Democrats endorsed the legislation, after the group took in presentations from bill cosponsor Rep. Henry Cuellar, D-Texas, and Continental Resources CEO Harold Hamm.

But Barton made clear he will only go so far to cut a deal.

“What can’t happen is you mess with the underlying principle of the bill, and the underlying principle is the U.S. oil industry is the most competitive in the world,” Barton said. “If we create a market that they can play in — in world markets — they will be successful and if they are successful the U.S. economy will be successful. Don’t mess with that principle.”

To get oil exports legislation through the Senate, some supporters are mulling the possibility of renewing tax credits that help support wind power. But that could bleed off more support among Republicans than it gains among Democrats.

And it appears to be a non-starter with many oil export advocates in the House. “I don’t think you are going to have to give away the store” to get an oil exports bill through the Senate, Barton said.

The House Energy and Commerce Committee is set to vote on the legislation next week; if negotiations yield a compromise before then, it could be taken up as an amendment.

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