Allowing the export of domestically produced light crude would beneft North Dakota, experts say.
With a surplus of crude oil in the U.S. right now and shale development still high despite a downturn in prices, there has been talk of removing the long-standing export ban on crude oil.
The ban was enacted in the 1970s after the Arab oil embargo caused an energy crisis in the U.S. and elsewhere. Alaskan crude holds a special status as being exportable, and exports to Canada were never banned.
Now, with storage facilities filling up and crude oil production remaining high, many see the ban as antiquated and a barrier to greater economic opportunity. Those in the Bakken Formation state of North Dakota agree with that.
“I think the state of North Dakota stands to gain a lot from lifting the export ban,” says David Flynn, an economics professor at the University of North Dakota. Flynn has studied the oil industry and sees many benefits in lifting the ban.
One of the biggest potential benefits Flynn sees is an influx of money for infrastructure. With more profit from more trade, the Bakken could see an expansion in the oil transportation network.
“We’d see a significant push to improve infrastructure,” Flynn says. He adds that it would be quick and bountiful.
As the infrastructure improves, more oil companies and associated businesses would come in and provide an economic boost. Housing would come in quicker also, Flynn says.
Flynn believes even with just a hint of lifting the ban, companies will likely take the possibility into consideration as they draft plans for the future, which would prevent some downsizing. “That in itself could result in a minor lift in the economic slowdown in the region,” he says.
MOVE OF PRACTICALITY
Sen. John Hoeven (R-North Dakota) is one of the main supporters of lifting the ban and says that doing so would be a move of practicality. “We actually have more light sweet crude than we can refine,” he says.
Hoeven says the country’s refining capacity is slanted toward heavy crude oils that are imported from nearby countries like Canada and Venezuela. Most refineries were set up before modern technology unlocked an abundance of light sweet crude in the U.S.
The main benefactors of the ban, Flynn says, are the refineries that enjoy a “partial market.” He says this means one part of the supply chain is put on a pedestal over the others. “I think the arguments are stronger now than they ever have been to get rid of this export ban.”
Some refineries are starting to make the conversion to meet the growing demand, but it is a long and expensive process, Hoeven says.
Competing in the global market will pull in more money, which means more jobs and infrastructure in North Dakota and elsewhere, Hoeven says.
WORKING ON LEGISLATION
Hoeven is working along with Sen. Heidi Heitkamp (D-North Dakota) and Sen. Lisa Murkowski (R-Alaska) on legislation that would reform oil policy in the U.S. and have the ban lifted.
“All commodities should be able to find their international market,” Heitkamp says. “For me, it’s just an issue of fundamental fairness. Having the ability to market the product will continue the investment in the resources in this country and will continue to build our self-sufficiency.”
The challenge in selling the idea to members of Congress, Heitkamp says, is that many fear for their political careers in supporting such a bill if gas prices do indeed go up as a result. Heitkamp says it’s an active process of educating people about how this likely won’t be the case.
“The time is now,” Heitkamp says. “There’s no reason not to do it."