Supporters of ending federal restrictions on U.S. crude exports are stepping up pressure to reverse the ban in the wake of today’s historic agreement that paves the way for Iran to resume unfettered shipments of its own oil in exchange for curbs on its nuclear ambitions.
A coalition of oil and gas producers wasted no time in calling for President Obama and Congress to chip away at the long-standing ban, arguing today’s deal leaves American companies at a disadvantage.
"Now that the United States government has secured a deal with Iran regarding its nuclear program, which puts in place a process that will allow Iran to freely sell oil on the world market, we urge President Obama and Congress to use their authority and allow U.S. oil producers to access that same global market," Producers for American Crude Oil Exports Executive Director George Baker said in a statement.
"Once these sanctions are removed, the U.S. will be the only major oil producing country in the world that has restrictions on the export of domestically produced crude oil," he added. "The consequences of this voluntary, self-imposed restriction places American companies at a significant competitive disadvantage and threatens workers, government revenues, and the United States’ relationship with our international trading partners."
Senate Energy and Natural Resources Chairwoman Lisa Murkowski (R-Alaska) for months has used the specter of additional Iranian oil supplies on world markets to argue for ending the ban, which she’s likened to sanctions on U.S. producers that hinder domestic energy security.
The Independent Petroleum Association of America made the same point.
"As soon as Iran is permitted to export its surplus oil on the world market, why can’t we allow our own companies to do the same with their American-made surplus of crude oil?" asked IPAA President Barry Russell in a statement.
"Any deal that lifts sanctions on Iranian oil will disadvantage American companies unless we lift the antiquated ban on our own oil exports," she said last month. "The impending deal with Iran is at the center of the nexus between national security and energy policy."
Earlier today, Murkowski and other key Republican senators highlighted the geopolitical impacts of the domestic oil boom in a letter to Director of National Intelligence James Clapper (E&E Daily, July 14).
Senior administration officials today said the agreement includes stringent restrictions to seal off Iran’s pathways to a nuclear weapon, while stressing that sanctions will go away only when "Iran has in fact earned the confidence of the international community."
According to a fact sheet distributed by the White House, the deal includes numerous benchmarks for Iran to demonstrate compliance.
But export backers point to recent Iranian statements that Tehran anticipates a doubling of oil shipments — to roughly 2.3 million barrels per day — once sanctions are lifted.
Under the timeline announced today, Iran could receive sanctions relief in as soon as six months, flooding the already saturated global oil market. U.S. Energy Information Administrator Adam Sieminski in April told the Senate Energy and Natural Resources Committee that an expected production increase of 1 million barrels a day by Iran could cause global oil prices to fall by $5 to $15 a barrel in 2016.
Republicans promptly slammed today’s deal.
Speaking on the Senate floor, Majority Leader Mitch McConnell (R-Ky.) said the agreement confirmed all his fears about the monthslong negotiations.
"Remember: Ending Iran’s nuclear program was supposed to be the point of these talks in the first place; what’s already clear about this agreement is that it will not achieve — or even come close to achieving — that original purpose," he said.
House Majority Leader Kevin McCarthy (R-Calif.) echoed the criticism.
"Nothing in the deal announced today eliminates Iran’s ability to eventually become a nuclear threshold power," he said in a statement. "It just delays the day and rewards the Iranians with billions of dollars in sanctions relief until that day comes."
Under a hard-fought legislative compromise enacted earlier this year, the Obama administration must submit the agreement to Congress for review before it can ease sanctions. According to a fact sheet from Senate Foreign Relations Chairman Bob Corker (R-Tenn.), Congress has up to 82 days to review the deal.
According to the terms of the law, Congress can block Obama from making the sanctions relief permanent with passage of a disapproval resolution. However, Obama today reiterated that he will veto such a resolution if it comes to his desk.
"I am confident that this deal will meet the national security interest of the United States and our allies," Obama said at the White House this morning. "So I will veto any legislation that prevents the successful implementation of this deal."
ClearView Energy Partners predicted that Congress won’t be able to muster the two-thirds majorities needed in both chambers to override Obama’s veto.
"Even if all 54 Senate Republicans unite in opposition to the deal, this scenario would require fewer than 34 of their 46 Democrat counterparts to actively stand with their President," the firm said in a research note this morning. "This would be an unlikely outcome under any circumstance, and it seems particularly so ahead of the 2016 elections, where Democrats’ hopes of retaining the White House and recapturing the Senate may depend upon favorable perceptions of President Obama’s foreign policy legacy."
