By Jon Kovash
Although some small town residents see oil and gas drilling as destructive to their rural way of life, others welcome the most recent oil and gas boom for its promised benefits to the local economy.
Many Americans outside the boomtowns also hail this new world of fracking for oil and gas –– with its man camps, truck traffic, unknown chemicals injected deep underground and an insatiable thirst for water –– as a way to help America become “energy independent.”
So it may surprise some people that America already exports a huge amount of oil, and the exports are rising at an accelerated pace. In 2011, for the first time, we exported more refined gasoline, diesel and other petroleum based fuels than we imported.
We also export more and more crude oil. Since 1975, the Energy Policy and Conservation Act has banned the export of domestic crude, but that ban lost ground after presidents Reagan and the first George Bush declared exceptions in the “national interest.” In the ensuing decades, as politicians of all stripes repeated the energy independence mantra, we never did impose a ban on exporting refined domestic oil products.
Now that the price of those fuels, set by global demand, is soaring, U.S. refineries churn out almost 2 million barrels each day of refined fuels destined for mostly Canada and Latin America. That’s a doubling of exports in five years.
For years, we have been told that America’s creaky, dilapidated old refineries help raise the domestic cost of gasoline. But despite their age, those refineries are exporting a dramatically increasing portion of their output, reports The Guardian. The Wall Street Journal adds, “The secret to making a profit in refining these days is to source crude oil domestically and sell refined products to U.S. consumers at prices based on imported oil.” After decades of warning us that, if drilling is restricted in any way, we will freeze in the dark, the American Petroleum Institute now argues that “we’re producing more than we consume.”
The Obama administration may be setting the stage for a similar scenario with natural gas. In December, the Energy Department released a study extolling the “national economic benefits” that would derive from exporting liquid natural gas (LNG). It turns out the study was done by NERA Economic Consultants, oil and coal lobbyists whose clients include the American Petroleum Institute.
The study declares that export revenue “would generally help most Americans” and “generate thousands of construction jobs.” The downside, according to the study, is that U.S. consumers would pay as much as 25 percent more for natural gas in five years. President Obama has already approved the Cheniere Energy LNG export terminal in Louisiana which, by 2016, will be exporting gas equivalent to 4 percent of the U.S. demand.
As yet there is no coherent overall movement to oppose the notion that America should now become an energy exporter, but there is potential for a bipartisan coalition with a deep and wide consensus among environmentalists, consumers and industry. The Sierra Club has taken the lead in opposing LNG exports, and Oregon Democratic Sen. Ron Wyden has protested that exports will raise domestic prices. Exporting liquid natural gas is also opposed by some business leaders, who say plentiful and cheap domestic gas prices can help revive American manufacturing. Their corporations are engaged in a new “insourcing” effort to bring back jobs from China, in part encouraged by current low U.S. natural gas prices. They believe that a rebirth of domestic manufacturing would produce far more jobs and far better jobs than exporting oil and gas.
Meanwhile, Western public and private lands remain under assault, and opponents have been reduced to opposing fracking, community-by-community, tract-by-tract. It is obvious that raising oil and gas exports will also increase pressure to lease, explore and exploit natural gas by drilling here at home. It also leaves the oceans vulnerable to disastrous spills and commits the United States to maintaining a costly military infrastructure to protect international shipping lanes and pipelines.
It’s time for the issue of energy exporting to become part of our overall discussion of American energy policy, because where we are headed has everything to do with environmental degradation and nothing to do with “energy independence.”
Jon Kovash is a contributor to Writers on the Range, a service of High Country News (hcn.org).