Government Accountability Office Report on Oil Export Ban Based On Industry-Funded Studies

oil exports

Earlier this year, at CERAWeek, the must-attend energy conference for industry players, Sen. Lisa Murkowski (R-AK) made an interesting statement while advocating for lifting the oil export ban in her keynote speech.

This year – 2014 – will be the Year of the Report. Think tanks and research institutions across the country are examining the possibility of crude exports and the potential ramifications. Working groups are assembling, writing papers, crunching numbers.  And that’s a good thing,” Murkowski said.

Sen. Murkowski made this statement as part of prepared remarks described as a “roadmap” for lifting the ban on crude oil exports. Murkowski’s prediction would make it seem like she already knew the reports would reach the conclusion that lifting the ban on crude oil exports was “a good thing.” Perhaps it was just a lucky guess for her back in March, but she was right.

In October, the Governmental Accountability Office (GAO) reached just that conclusion in its report, Changing Crude Oil Markets: Allowing Exports Could Reduce Consumer Fuel Prices. It should be noted that the GAO undertook this effort at the request of none other than Alaskan Senator Lisa Murkowski.

The GAO concluded that lifting the crude oil export ban was a positive because it could potentially lower consumer fuel prices in the U.S. However, when it came to analyzing the environmental impacts of increased oil production and exports, the Congressional agency was unable to reach any quantifiable conclusions.

We found that crude oil development may pose certain inherent environmental and public health risks, however, the extent of the risk is unknown,” GAO stated.

It would appear that in Murkowski’s “Year of the Report,” the environment was not an issue deemed worth reporting on. But when it came to studies touting the benefits of lifting the oil export ban, there were plenty to choose from.

There were four reports that the GAO reviewed to reach its conclusion. One was sponsored by the American Petroleum Institute and completed by ICF International. The GAO notes that when it came to the topic of “Environmental Implications,” the report funded by the American Petroleum Institute didn’t address them.

Another report was funded by “several oil companies” and, as one might expect, environmental implications also were “not addressed” in that report. 

A third report that did actually look at environmental implications was sponsored by Resources for the Future and had the clever title of Crude Behavior. This report concluded that the environmental implications of lifting the crude oil export ban would be limited to an increase of carbon dioxide emissions of 22 million metric tons per year, although the report’s analysis of the environmental implications was limited to a single three-sentence paragraph, which also encapsulated the authors’ analysis on global oil security.

Resources for the Future is headed by Phil Sharp, who just finished seven years on the Board of Directors of Duke Energy. Earlier this year he was defending the company’s policies regarding its handling of coal ash contamination in the Dan River.

The final report the GAO reviewed was Economic Benefits of Lifting the Crude Oil Export Ban, sponsored by the Brookings Institute and completed by NERA Economic Consulting. On page 95 of the report, the authors assess any environmental impacts in a simple cost benefit analysis regarding CO2 emissions.

Considering the latest guidance from the U.S. EPA on the social cost of carbon is estimated to be $30 per ton of CO2, the costs of using an oil export ban as a means of limiting emissions are 30 to 45 times as large as the benefits.

The report isn’t Brookings' only foray into this issue. On September 9th, the institute hosted former Secretary of the Treasury Larry Summers to speak on the topic of U.S. oil exports.

Summers wasn’t there to debate the various issues regarding the costs and benefits of lifting the crude oil export ban. He was at Brookings to sell the merits of lifting the ban. And he brought a very strong sales pitch.

“I believe that the question of whether the United States should have a substantially more permissive policy with respect to the export of crude oil and with respect to the export of natural gas is easy,” Summers said. “The answer is affirmative. The merits are as clear as the merits with respect to any significant public policy issue that I have ever encountered. And it is an important test of the efficacy of the functioning of our democracy whether within the next nine months we will get to that correct solution.”

And thus in the “Year of the Report,” we see how Senator Murkowski has been able to get her desired answer from an “independent” Government Accountability Office study — a study which was unable to quantify any environmental impacts because it was based on four “studies” that either didn’t bother to look at that issue or did so in the briefest way possible.

In The Hill’s coverage of the GAO report, there was no mention of who sponsored the “studies” the report was based on. However, the author did ask Senator Murkowski to comment on the report.

A strong proponent of lifting the ban, Sen. Lisa Murkowski (R-Alaska), cheered the report on Monday, calling it a “welcoming addition” to “growing” evidence that supports “greater oil exports.”

And thus the oil industry gets what it wants based on reports that it funded. Meanwhile, the American public is left with the impression that “independent studies” conclude that the expansion of production in U.S. oil for export will have minimal impact on the environment. Nothing could be further from the truth in reality.