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Key U.S. senator says consumer impact crucial in oil export debate

WASHINGTON, Jan 30 (Reuters) - The decision whether to eliminate a 40-year-old ban on most U.S. crude oil exports should hinge on whether it would lead to higher domestic retail gasoline prices, Ron Wyden, chairman of the Senate Energy Committee, said on Thursday.

The panel held its first hearing in 25 years on whether the restrictions should be lifted, responding to a strong push by oil producers and business groups who are seeking to change the policy as domestic energy production soars.

Wyden said he feared that the impact of a policy change on consumers would be drowned out by "a number of influential voices" that want to export oil.

The think-tank Center for American Progress, which has close ties with the White House, said in a paper this week that domestic gasoline prices would rise if the export ban was lifted.

"I just want to hammer home the point this morning that for me, the litmus test is how middle class families will be affected by changing our country's policy on oil exports," said Wyden, an Oregon Democrat.

Lisa Murkowski of Alaska, the energy panel's top Republican, said lifting the ban was "about production and jobs." Maintaining the ban would sooner or later depress U.S. oil production, she warned.

While the United States can export crude oil products such as gasoline and diesel, current laws require a presidential waiver to sell most unrefined crude oil abroad. This effectively bars most exports for now.

Harold Hamm, chief executive of Continental Resources , the largest leaseholder in North Dakota's Bakken oil region, said the current "energy renaissance" in the United States was threatened by "outdated" policies.

The policy of holding U.S. crude oil back from global markets distorts the global supply of refined oil, which "sends the wrong message to our trading partners," Hamm said.

"By imposing trade restrictions on a single segment of the energy industry, namely domestically produced crude, our government is arbitrarily subsidizing some U.S. refineries - many of which are foreign-owned - by giving them the ability to source American oil at prices well below the world market price," he said.

Meanwhile, refined products from the United States are allowed to enter "higher-priced international markets," Hamm said.

AIRLINE URGES CAUTION

But Graeme Burnett, senior vice president at Delta Airlines , urged senators to resist calls to lift the ban, saying it would force U.S. crude out of a competitive domestic market to a less competitive global market.

"OPEC would reduce supply to maintain high global prices. The United States' use of homegrown oil would diminish and prices here at home would rise to match the higher global price for a barrel of crude," said Burnett, who manages fuel supplies for the largest U.S. airline.

Delta owns Pennsylvania-based Monroe Energy, an oil refiner. Burnett said East Coast refiners are particularly at risk if the crude ban is lifted, since they would face higher feedstock prices.

Senators asked witnesses whether a glut of U.S. crude oil was inevitable, given rising production, and would outpace domestic refining capacity.

Hamm and Amy Myers Jaffe, executive director of UC Davis' Institute of Transportation Studies, said this was on the horizon.

OPPOSITION FROM AFAR

Although senators like Murkowski have staked out their positions, others, like Wyden and Tim Scott, a South Carolina Republican, said they want to better understand a possible range of impacts.

Meanwhile, two Democratic senators not on the energy panel sent a letter on Thursday to President Barack Obama, urging him not to change the current law.

"Now is not the time to reverse these policies that protect American consumers and America's economic and national security," wrote Senators Edward Markey of Massachusetts and Robert Menendez of New Jersey.