ENERGY POLICY

GOP's 2016 right flank goes all in for crude exports

The fate of the nation's nearly four-decade-old crude export ban is splitting the GOP rank and file -- but the party's right flank is united in favor of unfettered oil sales.

Sen. Ted Cruz (R-Texas), who has developed almost no energy policy resume on his way to becoming one of the capital's leading tea party firebrands, jumped into the fray yesterday with a call to end limits on overseas crude shipments, calling them a "relic from ages when our supply of crude oil was viewed as quite limited." Sen. Rand Paul (R-Ky.), Cruz's partner in pole position for the GOP's 2016 presidential primary, agreed yesterday that blocking "exports of anything, unless we're at war with the country," makes little economic sense.

That Cruz and Paul would readily leap into a debate seen by many Republicans as politically perilous, given the ban's history as a safeguard against oil and gasoline price spikes, demonstrates how little conservatives have to lose by embracing a free-trade message to help sell one of the industry's top long-term energy policy goals. While the prospects of any Obama administration movement to ease the ban this year or next may be minimal, making crude exports a more palatable public conversation could help the next commander in chief make more direct moves to ease the 1970s-era restrictions.

The Republican duo got an unlikely boost yesterday from the nonpartisan think tank Resources for the Future (RFF), which released a paper projecting that an end to the ban could lower gasoline prices by as much as 7 cents per gallon thanks to increased continental refinery efficiency from the availability of a broader array of crude types.

"The economic arguments for lifting the ban are strong, based primarily on the gains from free trade and the example it sets when we live by our market principles," RFF's authors wrote. "Such action will create winners and losers, however, and may lead to increases in greenhouse gases."

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Cruz's speech before an adoring crowd at the conservative Heritage Foundation was mostly a paint-by-numbers recitation of GOP boilerplate -- sprinkled with the occasional crack aimed at former Vice President Al Gore and "Birkenstock-wearing" environmentalists. But the Texan made some waves by promising to release an energy bill in the coming weeks that would lift the crude export ban, an issue on which Republicans have not yet coalesced around a unified position (E&E Daily, Jan. 30).

Also included in his forthcoming energy bill, Cruz said, would be a relaxation of the process to export liquefied natural gas and coal. The bill's other planks are largely a mash-up of existing Republican proposals to expand oil and natural gas drilling on public lands, reduce federal regulations, and approve the Keystone XL pipeline.

Some of the ban's biggest GOP critics, such as Senate Energy and Natural Resources ranking member Lisa Murkowski of Alaska, argue that no such legislation is required in order to maximize the short-term economic benefits of more crude exports. Current exemptions to crude export restrictions that cover shipment of certain Alaskan, Canadian and re-exported fuel could pave the way for as much as 500,000 barrels per day in new exports by the end of the year, Citigroup's global head of commodities research, Ed Morse, said yesterday during remarks at the Center for Strategic and International Studies.

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