House Approves Termination of Export Ban on North Slope Oil

The House voted Wednesday to end the 22-year ban on the export of Alaska North Slope oil, a step billed as creating thousands of jobs in California and Alaska while fetching higher prices for Alaskan oil.

The measure is unlikely to affect the net supply of oil to California, which depends on Alaskan production for about 45% of its oil. But the state will probably use more of its own crude, creating local Oil Patch jobs and investment, the government said.

British Petroleum Co., which owns about half of the oil production from Prudhoe Bay, the North Slope’s largest field, was seen as the main industry beneficiary of lifting the export ban. BP has few West Coast refineries to which to send the crude oil, and has been pushing for permission to export it to Asia.

Meanwhile, Los Angeles-based Atlantic Richfield Co., which owns about 22% of the field’s production, sends all of the oil it produces to its two West Coast refineries, with little to spare. Consequently, Los Angeles-based Arco has no plans to export any of its North Slope production, spokesman Al Greenstein said Wednesday.

BP’s oil will fetch higher prices in Asia, which will encourage higher Alaskan production, the Department of Energy said. Meanwhile, less Alaskan oil will flood the California market, boosting crude prices here $1.20 to $1.60 a barrel, the DOE says.

That will create as many as 25,000 oil-industry jobs in the two states, according to a DOE estimate. But retail gasoline prices will only rise “slightly over 1 cent per gallon,” the government says, because most of the Alaskan and California oil is refined by the same companies that produce it, eliminating the middleman.

Meanwhile, increased California oil production will boost tax and royalty revenue to the state by up to $230 million.

“This legislation is good fiscal policy, sensible economic policy, and, most importantly, sound energy policy,” U.S. Energy Secretary Hazel O’Leary said.

The bill, approved on a 289-134 vote, adopts the main provisions of a Senate version passed in May and accepted by a House-Senate conference. Senate approval of the compromise is needed, then it would be sent to President Clinton, who supports the measure.

The issue is separate from a highly controversial proposal to open the Arctic National Wildlife Refuge in northern Alaska to drilling.

There has been some criticism, however, that if the refuge should be opened for oil development, some--or all--of that oil might now be exported.

“Finally, after more than 20 years, we have decided that perhaps to a small measure economics ought to dictate what we do in the oil industry,” Rep. Bill Thomas (R-Bakersfield) said.

Congress imposed the export ban in 1973 when an embargo by the Organization of Petroleum Exporting Countries, sparked by the Arab-Israeli war, caused fuel shortages in the United States.

It was kept in force by politically powerful maritime unions because the export ban assured that Alaskan crude would be shipped by U.S. crews. The unions dropped their opposition to lifting the ban after winning assurance that ships with U.S. crews would still carry the oil.

The United States continues to rely on foreign oil for about 50% of total consumption, but much of that comes from friendly European and Western Hemisphere countries, and the government has built up large reserves to protect the nation from shortages.