Senator Bob Menendez, a New Jersey Democrat who in June had signed a letter to President Barack Obama saying unfettered US oil exports would harm American consumers, last week said he would support the “strategic export of American oil to allied countries struggling with supply because Iranian oil remains off the market.”

His spokeswoman Tricia Enright said the senator has not shifted his stance on the law that restricts US crude exports. Rather, his call for exports to allies, made in a speech at Seton Hall University in which he announced his opposition to the Iran deal, “was used as a sweetener to alleviate allies’ concerns regarding higher energy prices should sanctions be snapped back into place,” she said in an email.

Still, his comments represent an acknowledgement that crude exports could be used geopolitically, an argument that US oil producers and their allies in Congress have been pushing.

They initially began their campaign to lift the restrictions — put in place by Congress in the 1970s following the Arab oil embargoes — by warning of a looming light oil glut from the shale boom that domestic refineries would be ill-equipped to handle.

But those alarms have so far failed to gain a ton of traction with an American public conditioned by gasoline price volatility to think of oil as a scarce commodity vulnerable to geopolitical shocks.

So, instead, the arguments have begun to shift towards national security concerns and assuaging allies, particularly with the US and its P5+1 allies reaching a nuclear deal with Iran.

“We’re going to let Iran go ahead and sell their oil anywhere. Japan needs it, all these other nations need it, and we’re going to restrict ourselves,” Senator Lisa Murkowski said in May on the Platts Capitol Crude podcast. “At the end of the day, all we’re doing is sanctioning ourselves. That’s not good policy.”

Murkowski, an Alaska Republican who chairs the Senate Energy and Natural Resources Committee, has been Congress’ most vocal proponent of lifting the export restrictions.

But whether this national security angle will persuade enough skeptics to support lifting the export restrictions seems doubtful. Current market conditions don’t exactly lend support to the idea that anybody is suffering from a lack of access to oil.

“In a world overflowing with oil right now, our allies aren’t facing a supply disruption, regardless of what happens with Iran,” said Jay Hauck, a spokesman for CRUDE, a coalition of US refiners opposed to lifting the crude export restrictions.

He said domestic refiners could easily supply US allies with finished fuel, which is not subject to export restrictions, keeping refinery jobs in place.

And liberal advocacy group Allied Progress this week unveiled a new ad targeting Menendez over his “public wavering” on crude exports, citing his Seton Hall University speech.

“Until recently, Senator Menendez seemed to have a great understanding of the importance of the ban on exporting American crude oil overseas,” said Karl Frisch, executive director of Allied Progress. “This isn’t a bargaining chip for a game of Congressional legislative poker. We shouldn’t be gambling with the jobs of hardworking Americans or our efforts to achieve energy independence.”

Congress could vote later this year on a bill sponsored by Murkowski and others to allow exports, but most experts say the legislation is still several supporters short of passing.

Support for exports from Menendez, as his spokeswoman said, is only conditional on renegotiating the Iran deal, while other opponents have said greater exports could lead to more fracking and fossil fuel dependence.

Certainly, the Obama administration sees no political gain in loosening the spigots, having only allowed incremental exports, and it is improbable that the president would take Menendez’s suggestions of strategic exports at face value, given that Obama has staked his legacy on successfully implementing the Iran deal.

The national security rationale may be turning some heads in these fraught geopolitical times, but further vote-whipping will be needed for crude export proponents to win the day.

Source: http://blogs.platts.com/2015/08/27/us-crude-export-national-security/