Oil Corporations Scheme to Export America’s Security

Leo W. Gerard USW President Emeriti

Oil Corporations Scheme to Export America’s Security

Oil honchos and their legion of lobbyists petitioned Congress last week to pad corporate profits at the expense of American energy independence and national security.

And Republicans on a Senate committee voted to comply.

On the demand of oilmen, the committee agreed to end America’s 40-year ban on exporting crude. They did it because oil corporations think they can make a couple more bucks on each barrel by selling American crude on the international market.

Never mind that America doesn’t produce sufficient crude to meet its needs and still imports 44 percent of what is refined in the United States.  Never mind that exporting American crude makes the United States more dependent on belligerent Russia and hostile Arab nations. Never mind that complying with oil corporations’ demands for potentially higher profits hands oil-rich Middle Eastern countries additional power to crush the U.S. economy with another oil embargo. Instead, what was important to the GOP majority on this Senate committee was bowing and scraping before multinational oil corporations that pledge allegiance to no country.

A Republican President, Gerald Ford, signed the export ban in 1975 in an attempt to move the nation toward energy independence after the turmoil caused by the OPEC oil embargo. In 1973, in retaliation for America’s support of Israel during the Yom Kippur War, OPEC nations refused to sell crude to the United States, roiling the economy and triggering massive fuel shortages, price spikes and interminable lines at the pumps.

At that time, America imported 27 percent of its crude. Now the figure is significantly higher with 44 percent of crude refined in the U.S. imported. For all of its domestic oil development, the United States still imports more oil than any nation in the world.

Sure, America now is the world’s top oil producer, edging out Russia and Saudi Arabia. But it still doesn’t suck enough crude out of the ground to meet its own needs. So for every barrel exported, a barrel would have to be imported to replace it. That could make the United States increasingly dependent for fuel on nations like Iran and Iraq. Probably not a good idea.

Oil companies can export crude now. And some do. The 1975 law provides a bunch of exceptions to the ban and allows extractors to export if they get a license from the U.S. Department of Commerce’s Bureau of Industry and Security. The bureau will grant a license if it determines exports are “consistent with the national interest."

Oil corporations don’t care about the national interest. The fact that they’re demanding a federal law to enable them circumvent the licensing process means they know exporting crude is not, in fact, in the national interest.

At the Congressional hearing last week, Sen. Bob Menendez, D-N.J., explained clearly how crucial it is for the United States to keep this limited natural resource at home. He said America should “make sure we hold the key to our energy security rather than exporting it to the world.”

National security and energy security aren’t in oil corporations’ vocabulary. Their only interest is money. The push to send American crude offshore is all about more income for these already massively profitable multi-national corporations.

American crude is selling for about $5 less per barrel in the United States than foreign crude is on the world market. The oil companies want that extra $5. Pro-export studies by think tanks on corporate payrolls promote “letting drillers reap extra profits from selling crude oil overseas.”

Some, however, actually admit that exporting domestic crude would damage U.S. refineries, refinery jobs and refined product exports. And at least one points out that over the next several years as pipelines are completed connecting wells to refineries, the price for domestic oil is likely to rise closer to the global rate anyway.

They contend that although corporations will get more money per barrel by exporting, American gasoline consumers will pay less after their crude is loaded onto ships – which hopefully don’t suffer the fate of the Exxon Valdez – sent elsewhere to be refined, then put back on ships and sold on the world market.

This lower price contention rests on the baseless assertion that shipping American crude overseas will stimulate additional domestic drilling for hydraulic fracturing. The studies counsel those concerned about environmental problems associated with fracking not to worry.  Just don’t worry; be happy!

The dishonesty is breathtaking. The pace of new drilling for hydraulic fracking slowed in the United States for one reason: the price of a barrel of crude on the global market fell by half over the past year – from $110 to just above $50.    

And that had nothing to do with exports. It has everything to do with OPEC. Saudi Arabia has flooded the world market with crude. The glut cut prices. That discouraged additional U.S. drilling because it’s relatively expensive. And that decline is exactly what the Saudis wanted.

Exporting American crude would further inundate the swamped market. In some sort of upside down market logic, the pro-exporters say more oil on the world market will increase the price per barrel to a point where profit margins encourage drilling for hydraulic fracturing again.

In addition, the industry-purchased studies say the opposite. They say exporting oil will lower U.S. gasoline prices. Of course, they used data from last year when crude was selling for more than $100 a barrel.

A study using current prices released in July by Stancil & Co. a Texas professional consulting firm specializing in refining, pipelines and gas processing, says that exporting American crude would, in fact, raise U.S. gasoline prices.

Sen. Angus King, an independent from Maine, called the measure to allow crude exports the “No Fossil Fuel Left Behind Act.”

Americans want their fossil fuel left behind – that is, in the United States for use by Americans. A poll late last year by Hart Research Associates found a large majority oppose lifting the export ban, including 61 percent of Republicans. 

As long as there’s not enough crude produced in the United States to meet the needs of Americans, Congress should continue to forbid export of this vital resource critical to both a smooth-operating economy and national security. 

Leo W. Gerard also is a member of the AFL-CIO Executive Committee and chairs the labor federation’s Public Policy Committee. President Barack Obama appointed him to the President’s Advisory Committee on Trade Policy and Negotiation and the President's Advanced Manufacturing Partnership Steering Committee 2.0. He serves as co-chairman of the BlueGreen Alliance and on the boards of Campaign for America’s Future and the Economic Policy Institute.  He is a member of the executive committee for IndustriALL Global Labor federation and was instrumental in creating Workers Uniting, the first global union. Follow @USWBlogger