US: Congressmen urge Biden to ban oil exports

Nearly a dozen Democratic congressmen are calling on US President Joe Biden to combat high gas prices by not only freeing US Strategic Petroleum Reserve (SPR) barrels, but banning gas exports. US oil, according to a letter displayed by CNN.

The letter sent Monday (22) to Biden increases the pressure the White House is facing even from its own party to cut prices at the pump, which is irritating Americans and contributing to the biggest increase in inflation in decades. .

Calling the matter an “urgent matter,” House Democrats led by Rep. Ro Khanna of California urged Biden to ensure “affordable and reliable energy for American families.”

“We must use all the tools at our disposal to lower gas prices in the short term,” says the letter, which was also signed by eight other Democrats, including Representatives Barbara Lee, Katie Porter, Darren Soto and others. Senate Democrats sent a similar letter to Biden earlier this month.

‘It’s not a panacea’

Biden could be ready to use one of these tools as early as Tuesday (23).

Biden hopes to announce his decision to release oil from the SPR in an economic speech on Tuesday, officials told the CNN. However, the timing of such a move depends on other nations finalizing their agreements to do the same, officials said.

The specter of the United States, and potentially other nations, releasing emergency barrels has already helped to lower oil prices. After hitting $85 a barrel at the end of October, US oil prices have fallen by about 10%.

“Our main responsibility is how to reduce costs for the American working class,” Khanna told CNN in a telephone interview. “This is something that worries people. We need to address this concern.”

However, even proponents of using SPR recognize that it is not a long-term solution. It’s more of a Band-Aid.

This is because there is a finite amount of oil in emergency reserves. And releasing barrels will not resolve the imbalance between supply and demand caused by rising demand amid economic recovery and a lack of supply from OPEC, the United States and other major producers.

“It won’t be a panacea. But we have to do what we can,” Khanna said in the interview.

Would an export ban help – or would it hurt?

But House Democrats suggest that Biden should seriously consider the more dramatic move to ban oil exports — though several industry experts have warned that such a move could backfire on American consumers.

“A ban on US crude oil exports will increase domestic supply and put pressure on prices for American families,” said the letter from House Democrats.

This idea reached the highest levels of the Biden administration. The rise in gasoline costs so alarmed White House Chief of Staff Ron Klain at one point that he suggested taking the dramatic step of halting US oil exports to cut costs, an official told CNN.

Government officials believe they could secure an agreement on a coordinated release that would not require a ban on exports.

However, Goldman Sachs told customers last month that an export ban would likely be “counterproductive” and would have a “likely upward impact” on retail fuel prices.

This is because oil is a globally traded commodity and gas prices in the US are set by Brent, the world reference. If the world lost access to US barrels, Brent prices would likely rise due to lower supply.

And US oil refiners cannot rely solely on domestic oil to produce the diesel, jet fuel and gasoline that the economy depends on. Refineries mix US oil with foreign barrels to produce these products.

Khanna cast doubt on the analysis of industry experts, arguing they could clash in warning against oil export bans.

“It’s an exaggeration to argue that increasing the domestic supply of a product is somehow bad for Americans,” Khanna said.

Yet even Mark Zandi, an economist often cited by the White House, is skeptical.

“I’m not a fan of banning oil exports,” Zandi, chief economist at Moody’s Analytics, told CNN by email.

“I doubt it will significantly lower gasoline prices as the price of gas is largely determined by global oil prices rather than the price of domestically produced oil. It is also unclear whether domestic refineries would be able to efficiently process the type of oil the US exports. ”

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