USW on crude oil exports

Below are highlights from the testimony given by Leo W. Gerard, International President, USW before the Committee on Banking, Housing and Urban Affairs with regards to lifting the crude oil export ban.

“Congress cannot overlook the negative impact lifting the crude oil ban will have on fuel prices, economic security, and jobs.”

“Growing domestic oil production is providing the US with a significant economic boost and a measurable reduction in our nation’s dependence on foreign oil. In 2014, about 27% of the petroleum consumed by the US was imported from foreign countries, the lowest level since 1985.”

Consumers

“US consumers currently benefit from the lower oil prices caused by OPEC’s efforts to control global prices. These savings are substantial with estimates of about US$209 billion per year in consumer savings. This translates to US$1605 per driver and US$2182 per family. As for domestic production, lifting the crude oil export ban will not only hurt refiners and refinery jobs, lifting the ban will impact prices at the pump and eliminate the discount American consumers currently enjoy because of the crude oil export ban. The penalty for the consumer as a result of lifting the export ban would add up to US$25 billion per year, or US$125 per driver and US$257 per family. In extreme cases it could cause US refineries to close, which could endanger supplies of other refined products such as home heating oil in the Northeast.”

Jobs

“The growth in domestic crude isn’t moving global benchmark prices, but it has been keeping US gasoline prices down slightly, as new US capacity means it is possible for US refiners to access US landlocked crude. This has fostered significant development and investment across our nation’s refining sector.”

“The export ban kept thousands of workers employed in the region and backed out not just OPEC crude oil but also ensured that more refined product would be made on our shores.”

“What does this refinery investment look like? If the crude export ban stays in place, refinery investments of about US$8.7 billion over a 10 year period are forecast to bring in some US$14.6 billion of additional revenues. These projects are located in multiple states from Texas to Montana to California to West Virginia. What does this investment and annual refining look like in terms of employment and wages for refining work? According to the 2012 Economic Census performed by the Census Bureau, the averages job in the refining sector paid over US$100 000 per year, supported by US$1.8 million in value added per employee.”

Value added product

“US refineries are exporting more value added refined product now than ever before. Our members are not only producing most of the oil for domestic consumers but are expanding into the global market because of the crude oil export ban. This has meant increased domestic refinery investment, increased employment, and higher utilisation rates at refineries.”

“We should not trade this strategic manufacturing advantage for short term producer gains.”

Imports

“Let’s be clear, exporting a natural resource to have it refined overseas and imported back into the US is a net job loser for America. One only has to look at the world’s largest oil refining hub project, the Jamnagar oil refinery in India, which boasts on the company’s website that the gasoline produced at the facility is for export, primarily to the US and Europe, to get a sense on where US refining jobs will go if we lift the export ban.”

Domestic refining

“Lifting the crude oil export ban will send crude oil into countries that do not sustain the same environmental, labour, health and safety standards that we strive for and require as a nation. I know how many workers died refining the products US consumers used because of OSHA reporting requirements. Do we really want American crude, already extracted at a heavy cost to workers lives, to be refined in places like Qatar? A report by Qatar’s government found 964 deaths of migrant workers from just India, Nepal and Bangladesh in 2012 and 2013 but the press has been unable to verify those accounts and they are likely higher. The International Trade Union Confederation has called the state a country without a conscience. Which country would you rather have the gas in your car come from?”

Other developments

“It will also take some time to sort out the effects of the Department of Commerce’s clarification of policies regarding processed condensate. Robust exports of condensate are possible, and reports of both condensate exports and investments in condensate splitters highlight significant domestic investment. While condensate exports represent volumes of oil that could otherwise have been processed into completed fuels in the US, the investments in splitters are not small projects.”

“Refiners face the implementation of a number of regulatory standards in the near future which will require facility investments; Tier 3 automotive and fuel standards, the Renewable Fuels Standard (RFS), EPA state implementation plans, and other regulations will require significant but attainable modernisation efforts. The domestic crude export ban continues to provide independent refiners with a significant cost advantage to allow modernisation that will ensure the long term viability of US refineries and jobs."

Infrastructure

“Improving the paths for domestic crude to reach US coastal markets will further advantage US refining, and make much more sense than allowing crude exports.”

No impact on steel

“First lifting the ban provides no guarantee that domestic steel companies will manufacture the OCTG that goes into shale production. At the height of OCTG demand, domestic steel producers filed a trade case and the International Trade Commission found that the domestic industry’s market share decreased from 53.7% in 2010 to 50% in 2012. This decline was even more remarkable given the increase in domestic production capacity during this period.”

“Lifting the crude oil export ban will mean that crude oil will go to countries such as China. This will only provide an added benefit to a nation that consistently engages in trade practice that undermine US jobs and manufacturing and currently has over 600 million t of excess steel capacity.”

Workers and consumers

“For too long I’ve seen our country trade away USW jobs with unbalanced trade agreements, inadequate enforcement of our trade laws, and lack of real investment in our infrastructure, workers and industries. Unintentionally, Congress created an industrial policy with the crude oil export ban and by Congress lifting that ban, working families will see increased gas prices at the pump, layoffs at refineries, and economic devastation in refinery communities.”

Edited from testimony by Claira Lloyd

Published on 04/08/2015


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