A retired U.S. Navy commander is pushing back against a House Energy and Commerce Committee bill to repeal the decades-old ban on oil exports, saying it would likely raise prices and drive the nation to increase imports.
Kirk Lippold, a retired U.S. Navy commander who is now the head of a veterans advocacy group, said he disagreed with the bill the hearing on Thursday was considering.
Instead, Lippold advised the Republican leadership to take a step back and apply "caution" before seeking to push ahead the measure, which he said would have few of the intended effects raised by advocates.
Many of the witnesses said they support lifting the 40-year-old ban, as the GOP leadership remained adamant that removing it would boost jobs and the economy.
Lippold was the commander of the USS Cole destroyer when it was attacked by al Qaeda in Yemen in October 2000. "I have experienced firsthand … the devastating effects of reliance on imported oil when our forward-deployed assets are placed in harm's way," he said. "Before we adopt legislation to drastically alter ... longstanding and successful policies, we should proceed with great caution to evaluate the real-world consequences," he said in prepared remarks.
The bill would remove the 1975 ban on crude oil exports that was put in place as a hedge against oil embargoes, such as those implemented then by the Saudis and other members of the Organization of the Petroleum Exporting Countries.
Lippold advised that even with the boom in U.S. oil production, the country is dependent on imports, and any export policy should take that into account before being implemented.
He argued that the likely result of removing the ban would result in more imports, not less. "At this point, lifting crude export regulations will generate headwinds that would likely dampen the predicted decline in imports," he said.
The U.S. also would lose the "price discount" it has been enjoying from producing more of its own oil. He warned: "As U.S. supplies are exposed to a growing demand on international markets, the price discount that the U.S. has been enjoying for several years will dissipate."
This dynamic would drive the country toward greater reliance on imports, given that the price of imports would eventually become lower than the nation's own oil, he said.
Rep. Joe Barton, R-Texas, who is a principal sponsor of the bill ending the ban, took issue with his assessment of the only markets benefiting from removing the ban being those in Asia. He called on the ambassador of the Czech Republic to the U.S. to respond to Lippold's assessment that crude from the U.S. would go to Asia, with little or no benefit to allied democracies that the GOP is seeking to support by lifting the ban.
Ambassador Petr Gandalovic said U.S. energy exports would send a "strong signal to the world community that democracies stick together," but could not assure or predict whether his country would directly import U.S. crude.
"I cannot assure you that even if you pass this bill, there will be a direct purchase from our refineries of the U.S. crude oil," Gandalovic said. "I cannot assure and predict. I can predict that if there is an alternative coming from the U.S., as a democratic state that doesn't use imports of natural resources as a political tool, the world itself will be a more safer place."
Public companies in the Czech Republic are directed by the state, but the private sector is not controlled by the government, and it has little control over private refiners' decisions on what crude they import.
That is part of the country's energy security strategy: If one side of the energy infrastructure is affected by high prices or disruptions, the other can rely on different resources.
Others testifying before the committee differed with Lippold on the effect of lifting the ban. W. David Montgomery, a retired analyst with NERA Consulting, told the committee that lifting the ban would benefit drilling in the U.S. and the oil would be shipped to countries that have the refinery capacity to handle the lighter oils coming from shale formations.
"At the same time, consumers lose because the effect of putting more crude oil into world markets is to drive down world crude oil prices," Montgomery said. "Gasoline and heating oil prices in the United States are determined by world prices … [t]hus restrictions on crude oil exports also impose a cost on consumers in the form of higher gasoline prices."