Export ban on Alaskan oil criticized
After the Arab oil embargo produced long gas station lines in 1973, Congress passed legislation saying oil from Alaska's Prudhoe Bay could be sold only within the United States.
But at the moment, West Coast refineries want only about half the 1.6 million barrels a day of high-sulfur crude produced in the nation's largest state.
So as a result of the export ban, the remaining Alaskan oil is shipped 13,000 miles to the US Gulf Coast, even though there are customers for the oil much closer at hand. For example, Japan is only 7,000 miles from Prudhoe Bay.
Lifting the export ban would slash transportation costs and end up saving taxpayers at least $2.4 billion over the next decade, according to Dr. William Hogan of Putnam, Hayes & Bartlett, a Cambridge, Mass., consulting firm.
''Transportation costs to ship Alaskan oil to the Gulf Coast rather than to export it to Japan, Korea, or other Asian markets are about 10 times greater'' than to US gulf ports, Mr. Hogan says. In addition to longer distances, transportation costs to the gulf are sharply higher because the Jones Act requires oil shipped within the US to move in higher-cost US tankers.
Taxpayers pick up the tab for the higher transportation bill because transit costs are deducted from the wellhead value of the oil. The wellhead value is used to determine state and federal taxes.
The Hogan study was commissioned by Alaska Lumber & Pulp Company, which wants to sell US oil to the Japanese, according to James Clark, a company lawyer. But he admits Congress is unlikely to lift the export ban when it considers the Export Administration Act later this year.
Strong opposition from organized labor, whose members run the 80 oil tankers involved in shipping Alaskan oil, is one reason a repeal of the ban is not expected. ''There is no oil surplus in the US in terms of crude,'' argues Howard Marlowe, associate director of legislation at the AFL-CIO. ''For purposes of fueling our economy and protecting it in times of emergency, (the oil) should stay here.''
He adds that requiring shipment in US vessels ''is not a subsidy at the expense of the consumer, since consumers are paying for Alaskan oil at a price below the market clearing price . . . for imported crude.''