What do Vladimir Putin, Robert Menendez and 10 other members of the U.S. Senate in five different states have in common?
They’re all targets of a massive and expensive media campaign waged by both sides of the debate over the ban on U.S. crude oil exports, in place for 40 years.
“It’s not that surprising when you think of it,” said Bill Loveless, longtime energy journalist who has written columns for USA Today. “The oil producers have been pushing hard on this for several years now, and the push has gotten greater as the production from the shale formations has increased.”
The export ban was instituted during Ford administration, when the country was reeling from the oil embargo enforced by countries in the Middle East, prompting long lines for gasoline.
Fearing that oil was about to reach its worldwide limit, the ban was put in place in 1975 to try to ensure oil produced in the U.S. would stay within the nation’s borders.
But the North American energy landscape has been radically altered through the use of hydraulic fracturing and horizontal drilling, and now the energy industry sees its best shot in years to get rid of the ban.
The looming nuclear agreement with Iran gives oil producers some added momentum, Loveless told Watchdog.org.
“The proponents of lifting the restrictions would say, How is it that Washington would allow Iran to export more oil but not producers in the United States?” Loveless said.
“Why are we allowing foreign regimes to dictate how much we pay for our gas and electricity?” asks one 30-second TV ad broadcast nationwide and includes shots of a smug-looking Vladimir Putin:
The spots are part of a media campaign by a group called the Domestic Energy Producers Alliance, backed by Harold Hamm, one of the pioneers in hydraulic fracturing technology and the CEO of Continental Resources.
But another group, Allied Progress, led by Karl Frisch, longtime D.C. strategist for Democrats, has come out with its own TV blitz to keep the ban. Some commercials air nationally, and others are targeted on the state level.
“American oil belongs here in America,” the Allied Progress ads say, arguing that getting rid of the ban would cost jobs, raise gas prices and make the U.S. more dependent on oil from the Middle East.
Allied Progress is trying to pressure members of Congress set to return to Capitol Hill from their August recess — just in time for a protracted debate over the export ban.
Thirty-second statewide ads target U.S. senators in New Mexico, Colorado, Montana, New Hampshire and Maine, flashing the phone number for the Capitol Hill switchboard and urging voters to call the senators to keep the export ban in place. More ads in other states may be coming.
“It’s an interesting issue because it hasn’t been that divided along partisan lines,” Loveless said in a telephone interview. “There are Republicans and Democrats in favor and Republicans and Democrats opposed or uncomfortable with lifting the restrictions … It kind of depends if you have a refinery in your district.”
Independent refineries, especially those in the Northeast and the Midwest, generally want to keep the ban.
Refined products are not affected by the crude oil export ban, and refineries can take advantage of the difference in price between Brent crude — the generally accepted international price — and West Texas Intermediate crude — the price standard for oil in the U.S., which is lower than Brent.
“They’ve been enjoying the lower prices they pay for U.S. oil and the high margins that they enjoy as a result of that,” Loveless said. “It’s been very profitable.”
In addition, refineries have already spent an estimated $85 billion to handle the heavier crude imported from sources outside the U.S.
Most domestic oil is of a lighter, “sweeter” variety and would cost refineries more to make the conversion.
A report from the U.S. Energy Information Agency estimated lifting the export ban would cut refiners’ profits $22 billion a year.
Sen. Lisa Murkowski, R-Alaska, has been a harsh critic of the ban and as chair of the Senate Energy and Natural Resources Committee spearheaded legislation earlier this summer that could make ending it part of a larger energy package.
The ban is up for a vote in the U.S. House as soon as this month.
“It looks like we’re moving from the education phase to the action phase,” Loveless said.
It’s also turning into a potential issue in the presidential race.
On Thursday, Republican hopeful Marco Rubio of Florida announced he’ll lift the export ban if elected.
As the rhetoric heats up, both sides of the export debate are taking their best shots.
The anti-export ban Domestic Energy Producers Alliance has enlisted former congressman Martin Frost, a Democrat who served in the House for 13 terms, as one of its principal lobbyists.
Supporters of lifting the ban have pointed to a series of studies saying it’s counterproductive to U.S. interests and distorts the free market. Reports from Columbia University, the Harvard Business School and the left-of-center Brookings Institution call for lifting the ban, and former Obama economic adviser Lawrence Summers said “export restrictions are not an appropriate policy tool.”
Capitol Hill’s most vocal defender of keeping the ban is Sen. Ed Markey, D-Massachusetts, who recently said, “If we were to lift the export ban, we would send those U.S. refining jobs overseas along with our oil.”
A decision last month by the Commerce Department to temporarily allow small oil swaps between the U.S. and Mexico “shows that there is already sufficient flexibility under the U.S. oil export ban and that this longstanding law that protects American consumers, businesses and our national security should not be weakened or repealed,” Markey said.
The Democratic National Committee also favors keeping the ban, and the Obama administration doesn’t seem that interested in making changes.
“In a situation where we still import (seven) million barrels of crude oil per day, I don’t think an overly compelling argument has been made on the basis of pragmatic economics,” U.S. Energy Secretary Ernest Moniz told an energy conference in Houston in April.
Allied Progress put pressure on Menendez, accusing him of getting squishy in keeping the export ban in place. Here’s the 30-second spot that went after the New Jersey senator:
A spokesman for Menendez told the Houston Chronicle, the senator’s comments had to do with the Iran nuclear deal, and Menendez still supports keeping the overall ban. Allied Progress said it “declared victory” and stopped running the ad “after Menendez clarified his support of the crude oil export ban.”
How much do all these ads cost each side?
Watchdog.org left messages with Allied Progress and Domestic Energy Producers Alliance but did not receive a response from either group.
But given ad prices in national and big local markets, the figures may well go into millions of dollars.
“You’ve got big players,” Loveless said. “You’ve got big companies, trade groups, big independents that are making less money because of low oil prices but they’re still making a fair amount of money … It’s a healthy debate, and we don’t see that too much these days in Congress.”