U.S. considering a ban on crude oil exports, says House Democrat

(Bloomberg) --A House Democrat who’s urging the White House to reduce oil prices by banning exports of U.S. crude oil says he’s been told the idea is under consideration.

Representative Ro Khanna of California said he disagrees with a number of industry analysts and economists who have said the idea could backfire.

Representative Ro Khanna, a Democrat from California, speaks during a House Oversight and Reform Committee hearing in Washington, D.C., U.S., on Thursday, Oct. 28, 2021. Executives are testifying before the committee investigating allegations that oil giants misled the public about the role of fossil fuels in causing global warming.

“The economics of it makes sense,” said Khanna, who chairs the House Oversight and Reform Committee’s environmental sub panel.

The White House didn’t immediately respond to a request for comment on Khanna’s comments late Monday. 

The administration is poised to announce as soon as Tuesday a release of oil from the nation’s Strategic Petroleum Reserve in concert with other countries, according to people familiar with the planning who asked for anonymity to discuss the move before its announcement.

Earlier Monday, White House economic adviser Brian Deese said on Bloomberg Television that President Joe Biden is expected to discuss gas prices in the coming days.

Khanna drafted a letter to the White House Monday signed by nine Democrats urging the administration to block the export of U.S. oil, which has been allowed since 2015 when Congress lifted a 40-year-old ban on the practice. Since then, U.S. exports have regularly surpassed 3 million barrels a day, more than the production of major OPEC members such as Kuwait and Iran.

“We’ve heard it’s being considered and it’s worth sending the letter,” Khanna said of the administration. “They’ve told me and they told some of my colleagues they are considering it.”

Some experts have warned that American refiners can only process so much of the kind of crude pumped in U.S. shale basins and trapping supplies inside the country could result in a price collapse for a few types of crude while gasoline prices remain elevated.

“The damage to the folks down in Houston is still going to be pretty severe and any relief to consumers would be in the short term,” said Reed Blakemore, deputy director of the Atlantic Council’s Global Energy Center.

But Khanna said U.S. refineries could be reconfigured.

Biden has been considering a range of options to address gasoline prices that have been hovering around a seven-year high and have set off political alarm bells at the White House. While presidents have little control over the price consumers pay at the pump, gasoline prices are among most visible form of inflation for consumers, and rising energy costs threaten an economic rebound from the pandemic.