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POLL-Americans fear gasoline price risk if U.S oil export curbs eased

Matthew Robinson
Thursday, 19 Dec 2013 | 12:03 PM ET

NEW YORK, Dec 19 (Reuters) - The U.S. oil industry believes it has a surefire way to help lower gasoline prices - lift a decades-old ban on most crude oil exports and allow some of the shale oil bounty to flow overseas, bringing down global prices.

U.S. voters have a very different idea: stop exporting gasoline.

The deep split in views, revealed in a Reuters/Ipsos poll that is the first to examine attitudes in the United States toward what many expect will be one of the biggest and most important energy debates to hit Washington in decades: Should the ban on U.S. crude exports be lifted?

The poll found respondents nearly evenly divided on whether or not U.S. oil should be allowed to be shipped abroad.

Respondents were much more unequivocal, however, about gasoline prices, with a large majority stating they would oppose crude oil exports if it meant higher prices at the pump.

"No one wants to do anything that will raise the price of gasoline," said Sarah Emerson, director of Energy Security Analysis Inc in Boston, in reference to the poll results.

"That makes me believe that for the people that oppose exports, that's going to be a really strong card to play."

To view results of the Reuters/Ipsos poll, click: http://link.reuters.com/rap55v

The debate over oil exports, which is expected to begin in earnest in 2014, coincides with U.S. oil production hitting the highest level in 25 years on the back of the shale boom. The risk for producers is that output of the light, sweet shale oil could eclipse U.S. refiners' ability to process it in the coming years, depressing prices and forcing output to be shut in.

For U.S. oil refiners, especially those on the Gulf Coast which have benefited from the cheap shale crude and ability to sell fuel to foreign markets, there may be a risk to bringing the issue of petroleum exports into the spotlight.

The poll found a majority of those polled said that exports of gasoline, which are legal, should be restricted. That number shot up if respondents were asked if they should be restricted to protect gasoline prices.

These questions were taken from the ongoing Reuters/Ipsos poll between Oct. 28 and Nov. 11. The questions were asked of 2,400 American adults. The results have a credibility interval, a measure of precision, of plus or minus 2.3 percent.

For a Factbox on polls of five major energy issues, click

GASOLINE SWAYS OPINIONS

Oil exports are strictly limited by bans put in place after the Arab oil embargo of the 1970s. Under certain conditions companies can be granted licenses to ship oil overseas, but the volumes are small.

When asked simply if producers should be allowed to export oil, 41 percent of respondents said that they agreed with that statement, and 38 percent said they do not.

The question of whether oil exports should be allowed if it meant higher gasoline prices, yielded much stronger opinions, however: 65 percent of respondents would not want exports if it drove up pump prices, versus 17.5 percent who said they would still support them.

The poll results were also relatively consistent across the political field, with 67 percent of Democrats agreeing oil exports should be restricted if they caused a hike in gasoline prices, compared with 72 percent of Republicans and 65 percent of independents.

The poll also showed that 54 percent of respondents think gasoline exports should be restricted. That number jumps to 72 percent when they are asked if they should be limited to protect pump prices at home.

"Politically it's not a great issue," said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University and a senior White House energy adviser until late last year. "It's challenging to make the case that we should be exporting our own oil, even if economically there's an argument to do so."

The risk of higher gasoline prices is likely to be at the fore of the effort to keep the ban in place. Earlier this month, Democratic Senator Ed Markey of Massachusetts called reports that oil companies will attempt to overturn the ban "disturbing".

"This oil should be kept here in America, to benefit our consumers and to reduce our dependence on imports from the Middle East," Markey said in a statement.

UPHILL BATTLE?

For the oil sector, which has yet to start a large scale public campaign to overturn the ban, the arguments they are expected to put forward include: improving the U.S. trade balance and creating more jobs by boosting production.

In addition, they will likely state that by allowing exports, more U.S. crude will be produced and delivered into world markets, cutting global prices. That would in turn encourage global refiners to produce more gasoline, reducing prices in all markets, including the United States. U.S. fuel prices are tied to global markets, meaning they are influenced by factors outside of domestic supply and demand.

"It is incontrovertible that if the U.S. exported crude the price of gasoline would be lower," said Ed Morse, managing director of commodity research at Citigroup.

"And it is incontrovertible that the trading interests of the United States have become increasingly dominated by energy."

U.S. Energy Secretary Ernest Moniz last week said the export ban was a "child of the 1970s and the embargo", and that should the Department of Commerce decide to revisit it the Department of Energy would provide data and technical assistance.

The Department of Commerce's Bureau of Industry and Security (BIS) issues oil export licenses under certain conditions. Almost all the licenses received in recent years were for crude headed to Canada for internal use, one of the conditions under which a license can be granted.

Shipments to Canada jumped to 67,000 bpd in 2012 from 25,000 bpd in 2006, and are averaging just over 100,000 bpd for the first nine months of 2013. U.S. oil production was 7.3 million bpd over the period, according to U.S. government data.

Oil producers are pressing to do more. According to the BIS, companies filed for licences to export $113.6 billion worth of crude oil in 2012, up from $12 billion in 2006.

Some analysts argue that despite the surge in shale oil production, the U.S. refining sector is flexible enough to adjust and process all the rising crude flows, and that the pressure for a big increase in exports is unnecessary.

Given the political sensitivity of the issue, Columbia University's Bordoff expects that a serious debate about lifting the export restrictions will only happen if the flood of U.S. crude production starts delivering hard choices to oil companies.

"If there's a policy change then it will most likely be in response to impacts that we see on the ground," he said.

"If you start to see price disconnects, challenges around handling refined products on the Gulf Coast, producers saying they're cutting back or idling rigs because they can't fetch a world price - those are the types of things that might start people talking more."

(Additional reporting by Jonathan Leff; Editing by Grant McCool)