USW’s Gerard Argues For Keeping U.S. Crude Oil In The U.S.

Mark Gruenberg Editor, Press Associates Union News

Backed by letters and petitions from more than 10,000 U.S. oil refinery workers, Steelworkers President Leo Gerard argued strongly on July 28 for keeping U.S. crude oil in the U.S.

He ran into a buzzsaw of opposition, from the Senate’s ruling Republicans, Democrat Heidi Heitkamp of oil-rich North Dakota, and the other witnesses at the Senate Banking Committee hearing, called to discuss schemes to let the U.S. export its crude – and reimport refined oil.

The solons are considering proposals to lift the 1975 ban on export of crude oil produced in the U.S. The ban, enacted just after the 1973 OPEC oil embargo, was an attempt to help the U.S. become more energy self-sufficient. The other witnesses claim the ban failed.  

Those witnesses – two oil-state senators, an oil company executive, and a speaker for the right wing American Enterprise Institute -- all advocated the crude oil exports. So did an ex-GOP Bush administration Defense Department official. She said it would help national security.  

That left Gerard, with occasional help from Sens. Sherrod Brown, D-Ohio, Jeff Merkley, D-Ore., Elizabeth Warren, D-Mass., and Robert Menendez, D-N.J., standing up to the fusillade of pro-export testimony. 

“We’re not energy self-sufficient yet,” Gerard warned. “We need to take care of America first,” he declared.

“We’re still importing 47 percent of our crude. If we became self-sufficient, it would not only help at the gas pump, but it would help lower energy costs for steel, autos, aluminum, glass, paper, rubber and other industries that use oil,” he told Menendez. 

Gerard, whose 850,000-member union includes the 30,000 workers at two-thirds of U.S. oil refineries, said arguments for lifting the ban “are based on free market ideology in a world where the largest proven oil reserves are controlled by countries that use an international cartel (OPEC) to influence prices for political reasons.” 

And while the U.S. through conservation and increased production, significantly cut its reliance on foreign oil, we still import 27 percent of our daily petroleum product usage, he said.

Under those circumstances, he declared, exporting some of our own crude makes no sense – especially when our domestic crude production has skyrocketed so much that imports are at their lowest percentage since 1985. Not only that, but U.S. refineries and pipeline firms are spending billions to retool to handle even more of the U.S.-produced crude, he added.

The problem isn’t so much refining capacity, Gerard pointed out, but, according to the oil companies, lack of pipeline capacity to carry the oil to refineries. 

That led Menendez to point out that even the American Petroleum Institute, the famed “oil lobby,” issued a recent report saying investing in new refineries at home “enhances our national security” by lessening U.S. dependence on foreign oil.  

            U.S. crude oil exports would also put U.S. refinery workers’ jobs at risk, he said. The biggest, richest, customers for U.S. oil would be refineries in China and India, whose low-paid workers would refine it and ship the finished petroleum products, such as gasoline, right back.

Citing statements from India’s largest refinery firm, Gerard said that nation, plus Japan and China “will tackle not just our refinery capacity but our manufacturing base,” by shipping the refined products – at lower prices – back here.           

And Gerard noted the AFL-CIO Executive Council approved a statement last year opposing lifting current restrictions on crude oil exports. Gerard, chair of the federation’s Legislation and Policy Committee, said the statement was unanimous.

One other witness, a Tulsa, Okla., domestic oil and gas production executive, claimed two building trades unions support the exports of U.S. crude. He quoted those unions as telling a Texas GOP congressman the exports would create “hundreds of thousands of new jobs.”   

Gerard also made a distinction, which Merkley picked up on, between exporting crude oil, as the Republicans propose, and exporting high-value refined petroleum products. The Steelworkers, he said, back that. 

“It’ll be sold at the world price – a price set by Saudi Arabia, Qatar, Oman, Bahrain, Iran” and the other members of the Organization of Petroleum Exporting Countries, noted Gerard.

“Crude oil flows may be based on” political and economic “assumptions that are not correct,” said Menendez, whose state is home to huge East Coast refineries.

Merkley compared the oil export scheme to what’s happened to timber exports and imports in his state, Oregon. Timber is a large industry there, and it used to export higher-value finished products, such as plywood. Now it exports the raw timber to China, and imports the plywood. That’s the trade pattern of a third world country, the senator said.

“If it’s cheaper to send the crude to China” rather than use it in the U.S., “it’ll be sent there” by the oil firms, Gerard replied.  

“The people who understand the most about these exports and how they will affect refineries are the people who are working at the refineries,” and they’re dead set against the exports, he declared.