Should America Start Exporting Oil? Washington, long accustomed to hoarding America's energy imports, is now starting to debate the once-unthinkable: whether to start exporting crude oil from the United States. The political debate, which kicks off in earnest Tuesday with a speech and paper by Alaska's Republican senator, Lisa Murkowski, shows just how far the U.S. energy revolution has transformed generation-old ideas about energy security and the country's vulnerability. Exporting oil is banned by U.S. law. But Sen. Murkowski will try to make the case for why the U.S. needs to take a fresh look at the prohibition, and why exporting crude oil might make sense for a country that is still, and will apparently always be, a net importer of the stuff. The pro-export bandwagon has plenty of supporters: oil companies, free traders, a spate of energy analysts, and the edit pages of the Washington Post and Chicago Tribune. Jack Gerard, the chief executive of the American Petroleum Institute, the oil lobby, is expected to repeat his group's call for an end to antiquated export rules in a wide-ranging speech on Tuesday. Energy Secretary Ernest Moniz has said it's worth revisiting the ban, too. "Murkowski and Moniz are looking to put the issue on the table, and Murkowski is signaling that the GOP is ready to talk about this," said Skip York, an analyst at Wood MacKenzie, an oil and gas consultancy. Generally speaking, proponents figure crude exports will lead to higher domestic production, lower prices for consumers, and a healthier trade balance. But there's plenty of opposition to the idea as well, most notably from Democratic lawmakers such as Ed Markey and Robert Menendez, who say shipping U.S. oil overseas will hurt consumers by raising the price of oil and gasoline, no small matter in an election year. "The calls to overturn decades of U.S. law to permit the export of American crude oil are about boosting the oil industry's profits at the expense of our energy security and our consumers," Sen. Ed Markey (D- MA) told Foreign Policy. With the U.S. still getting nearly half of the oil it imports every day from OPEC, we should ensure that the oil we produce here stays here to reduce our dependence on unstable regions and protect consumers and our economy. With a few exceptions, the United States has banned exports of crude oil since the energy traumas of the early 1970s, particularly the Arab oil embargo that underscored just how vulnerable the American economy is to supply shocks and volatile oil prices. Ever since, the export ban has been apparently irrelevant: U.S. dependence on imported oil kept rising as production plummeted, reaching a nadir in 2005 when the United States imported three out of every five barrels of oil it consumed. But then the hydraulic fracturing revolution took the United States, and the world, by storm. Fracking unleashed huge amounts of natural gas, in turn setting the United States on the path to become a net gas exporter. At the same time, it made the United States into an oil-pumping powerhouse again. Crude-oil output rose from about 5 million barrels a day five years ago to nearly 8 million barrels a day now. In 2012, U.S. oil-production growth topped the world. The Energy Information Administration just revised upward its outlook for crude production, and expects the United States to flirt with 10 million barrels a day by 2019. Still, despite the fracking boom, the United States is far from self-sufficient in oil. It still imports around 10 million barrels a day, more in absolute and relative terms than it did at the time of the OPEC embargo. And plenty of energy experts, including in the U.S. government, expect crude production to taper off after that 2019 peak. So why are crude exports even on the table? In a way, it's because oil exports are already sneaking out the back door, in the form of refined products such as diesel fuel, gasoline, and petroleum coke. The United States now exports about 3 million barrels of refined products a day -- making the country a net exporter of the petroleum products, if not of oil itself. The hodgepodge of laws and regulations governing energy exports never banned the sale of finished goods, just the raw material. So part of the U.S. energy bonanza is finding its way overseas anyway. As Sarah Ladislaw of the Center for Strategic and International Studies wrote recently, U.S. energy exports seem to be guided by "molecule laws," where hydrocarbons are treated differently depending on their molecular makeup. Allowing exports of crude oil, proponents say, will help boost domestic production and enable a more efficient use of energy resources. Refineries on the U.S. Gulf Coast are optimized to process heavy, sour crudes, such as those that come from Canada, Mexico, Venezuela, and parts of the Middle East. The fracking boom, meanwhile, has unleashed torrents of light, sweet crude that could better be refined elsewhere -- but can't, because of the export ban. Since there is a glut of domestic production in the center of the country, and a dearth of ways to ship it exactly where it's needed, U.S. oil prices trade well below the global benchmark price. Over the last year, the spread between U.S. West Texas Intermediate crude and London-traded Brent crude has reached $23 a barrel; right now, it's around $13 a barrel. That's good news for Midwestern refiners, who can buy cheaper crude and then make gasoline and other products. But it doesn't do much for consumers, who still buy gasoline derived from the higher, global price. And it doesn't help U.S. oil producers, who get less money per barrel than their international peers. In terms of the U.S. consumer, there is no perceivable benefit from a ban on exports. To the degree there is a benefit in the market, it's to refiners who have access to cheaper crude, not necessarily to U.S. consumers," said Ed Morse, oil analyst with Citigroup in New York. Echoing the debate that has taken place in the last couple of years over U.S. exports of natural gas, opponents of crude-oil exports worry that shipping relatively cheap U.S. fuel abroad will lead to higher prices at home. Sen. Robert Menendez (D-NJ) warned President Barack Obama about the impact of exports on prices at the pump in a letter in December. Why would we want to export oil and raise American oil prices to match the world's oil price? Crude oil that is produced in the U.S. should be used to lower prices here at home, not sent to the other side of the world," he wrote. Supporters of oil exports argue that free trade would actually lower prices. If exports of crude are allowed, it should have a damping effect on global prices, and a damping effect on gasoline prices. So ironically, you could move to a lower price gasoline environment by allowing crude exports," said Citigroup's Ed Morse. Just as with exports of natural gas, supporters also point to the potential trade dividends. If the United States can eventually export 500,000 barrels a day -- and it already ships 100,000 barrels a day to Canada, one of the rare exceptions allowed under current rules -- that would be worth more than $16 billion a year at current prices. Given that crude exports would help the trade balance and, by ensuring more domestic production, boost job creation as well, Wood MacKenzie's York thinks the White House could support easing the ban, despite the tricky politics. It's still unclear yet whether there's enough momentum in Washington to end the ban on oil exports, and the physical glut in the Midwest may not max out until next year. But the very fact that top policymakers, including one of the leading energy voices in Congress, are taking a fresh look at the wisdom of restricting trade in a crucial global commodity speaks volumes about just how far America's energy revolution has already gone. Win McNamee/Getty Images