WASHINGTON — Oil producers clamoring for the chance to sell their crude overseas are coming to grips with a harsh political reality: Neither the administration nor the Republican-led Congress is likely to do anything big soon.
Within the Obama administration, major action is on hold now that regulators have blessed foreign sales of a minimally processed ultralight oil — a move that eases some of the economic pressure to lift the 40-year-old export ban, without alarming environmentalists worried about climate change or politicians worried about gasoline prices.
And on Capitol Hill, Republican leaders in charge of the House and Senate appear less than enthusiastic about wading into a debate over the politically divisive issue that could fracture their party and turn off voters.
"If you're Senate Majority Leader McConnell or House Speaker Boehner and you're aiming to show that Republicans can govern, you keep a short agenda of what's both important to Republicans and what's doable. You steer away from crude oil exports," said Jacob Dweck, a lawyer with Sutherland Asbill & Brennan who has advocated incremental liberalization of trade restrictions on oil.
To be sure, there is plenty of activity around the issue — and not everyone is willing to wait for a prolonged debate over the wisdom of sending some of the United States' crude overseas.
That urgency was on full display in the Senate last month, when Texas Republican Ted Cruz pushed his plan to lift the export ban as part of the Keystone XL debate. Cruz withdrew his amendment after it became clear he did not have the votes to pass it — an outcome that could have set back the oil industry's quest for exports.
A weaker alternative that would have put Congress on record supporting expanded energy trade, offered by Sen. James Lankford, R-Okla., also did not get a vote.
While some oil producers and politicians believe it is prudent to carefully and deliberately lay out the case for exports, others insist current low crude prices mean now is the best time to act, and waiting risks squandering that political opportunity.
So far, Sen. Lisa Murkowski, R-Alaska, has been steering the issue on Capitol Hill, adopting a self-described "methodical" approach, instead of sharp-elbow tactics. Over 13 months, she has used white papers, speeches and meetings with Commerce Department officials to chip away the ban piece by piece and lay the groundwork for a wholesale repeal.
In the House, Rep. Joe Barton, R-Texas, is leading the campaign for oil exports, having introduced legislation to undo the ban and promising an informal Republican Study Committee hearing on the issue within weeks.
Both know they need to convince voters — as well as the lawmakers who represent them — that oil exports are good for the country.
"It's an educational process," Barton said in an interview. "The more people learn about it, the more support we'll get. I think we can get a bill to the president's desk, and I think he'll sign it."
For oil export supporters, one major challenge is finding room for committee hearings and floor debates around other, more pressing GOP priorities.
But the biggest obstacle is politicians' fear that any vote to export crude will come back to haunt them — wielded by political opponents whenever gasoline prices rise, even if the change is unrelated.
"I don't see a whole lot of support, except for Republicans from the oil patch," observed Rep. Gene Green, D-Texas, who notes many of his House colleagues are not ready to vote on the issue.
"I can guarantee you they don't want to take a vote on this now," he said.
While raw crude exports are barred — with some exceptions for Alaska and California oil and shipments to Canada — gasoline, diesel and other refined petroleum products can be freely exported.
Several recent academic, think tank and government studies predict that U.S. crude exports would actually drive down the cost of international crude and domestic prices for gasoline that are pegged to those world prices. But Green said the studies aren't yet resonating with voters who are enjoying cheap gasoline. "It's hard for me to explain that" to constituents, Green said. "All they know is they're paying $1.90-something for gasoline, and you don't want to mess with that."
Oil industry lobbyists acknowledge it's a tough sell. George Baker, head of Producers for American Crude Oil Exports, which represents more than a dozen oil companies, said the effort involves changing decades of thinking built around the notion that U.S. crude supplies are limited.
"You can hardly blame the American people — after 45 years of hearing that we were in scarcity of oil and we'll always be addicted to imports — that it takes them a longer time to appreciate what is actually a counterintuitive reality: By putting U.S. oil on the world market you're going to lower the prices of world oil and you'll lower the refined product prices," Baker said.
But Baker sees progress on the issue, reflected in a recent PACE-commissioned survey of registered voters that found 69 percent supported "allowing American oil producers to sell crude oil to customers in countries who are trading partners."
Other polls — including one commissioned by refiners that oppose crude exports, and another funded by a liberal D.C. think tank — have documented the opposite sentiment, with voters widely critical of selling U.S. oil abroad.
U.S. oil producers view exports as a chance to get a higher world price for their crude — which can be discounted domestically because of logistical constraints and limited refining capacity for the light, sweet variety surging out of many Texas and North Dakota wells today.
That discount on domestic West Texas Intermediate crude compared to international benchmark Brent has dwindled to around $5 — far from the double-digit differences a year ago. That lessens some of the economic imperative driving crude exports, but oil producers insist a bigger differential will return — and along with it the need to sell into world markets.
Refiners say they have the capacity to run more light sweet U.S. crude and can make modifications to consume even more — eliminating the need for expanded oil exports.
The Commerce Department's Bureau of Industry and Security has already issued private rulings that affirm an ultralight oil known as condensate qualifies for export once it has been distilled. In December, the bureau issued a "frequently asked questions" document that broadly affirmed that interpretation, setting out the factors for determining whether crude or condensate had been sufficiently processed to qualify as exportable.
That alone acts as a pressure relief valve by allowing potentially hundreds of thousands of barrels of condensate to leave U.S. shores daily — instead of being blended into the crude processed by domestic refiners.
Dweck, the Sutherland lawyer, said the approach is well-suited for a low-oil-price environment, allowing a gradual expansion in foreign oil sales that reflects evolving market conditions.
But Dweck stressed that further liberalization by the administration depends on a wider spread between international and U.S. crude prices and an exhaustion of existing export opportunities.
On Capitol Hill, export advocates are considering an array of legislative strategies while they continue a broad educational effort — including tying the issue to separate trade and energy bills, and pushing compromise approaches that would ensure a president can reimpose the ban on crude exports if it's in the national interest.
While the Senate did not vote on the Cruz and Lankford export amendments, one oil industry lobbyist called the efforts "constructive," helping the sector sniff out where senators were on the issue, identifying lawmakers' concerns and suggesting a higher level of support than conventional wisdom suggests.
Dweck notes that the odds are still against lifting the export ban wholesale. But, "they can be improved somewhat with member education as well as by employing creative legislative compromises."
"Sometimes it takes many years for these issues to percolate and translate into legislation," he said. "Keeping up the education and the fire is critical."