Order Code RS22142
Updated May 25, 2006
CRS Report for Congress
Received through the CRS Web
West Coast and Alaska Oil Exports
Specialist in Energy Policy
Resources, Science, and Industry Division
As a reaction to oil price and supply concerns, questions about the export of crude
oil produced on Alaska’s North Slope are often directed at Members of Congress. The
export of this oil had been prohibited by the 1973 law allowing the construction of the
pipeline system now transporting oil to the ice-free, southern Alaska port of Valdez. But
following a period of depressed oil prices, legislation was enacted in 1995 permitting
export. Relatively small amounts — never more than 7% — of Alaskan crude were sold
to Korea, Japan, China, and some other countries. These exports stopped by 2000.
Currently, no crude is exported from the West Coast.
Ownership of Alaskan oil fields has changed. BP Amoco and Arco merged in May
2000, and as part of this transaction, Arco’s one-third stake was sold to Phillips. BP
Amoco is using the formerly exported crude in California refineries acquired in the Arco
deal. And Phillips (now part of ConocoPhillips) exports no Alaskan oil and has said it
has no plans to do so. The crude oil export issue keeps recurring, especially in West
Coast states, where gasoline prices have been higher than in the rest of the nation.
Concerns about exports contributing to regional fuel price differentials have been
voiced, and opponents of oil leasing in the Arctic National Wildlife Refuge (ANWR)
fear oil production from this environmentally sensitive area could be exported.
This report will not be updated.
Until May 2000, when exports stopped because of declining output and oil company
mergers, about 7% of crude oil production from the Alaska North Slope (ANS) was
exported to South Korea, Japan, and China. Unfavorable public reaction to exporting
domestic oil during times of high prices and tight U.S. supply have from time to time
focused renewed legislative attention on the Alaska exports issue.
ANS exports were banned when construction of the Trans-Alaska Pipeline System
(TAPS) was authorized in 1973, but an apparent glut of oil on the West Coast persuaded
Congress to lift the ban in 1995. However, recent record-setting prices for gasoline
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nationwide and especially on the West Coast — coupled with current proposals to permit
oil exploration in Alaska’s Arctic National Wildlife Reserve (ANWR) — have raised
concerns that there is no law prohibiting oil exports. Concerns have escalated based on
the apparently unfounded belief that Alaskan North Slope crude is now being exported.
This report summarizes the history of the ANS export ban, the reasons it was lifted,
and subsequent developments, and describes the current U.S. oil export situation. (For
information on the ANWR debate, see CRS Issue Brief IB10136, Arctic National Wildlife
Refuge (ANWR): Controversies for the 109th Congress, by (name redacted) and (name r
When the Arab oil embargo began in late 1973, oil development on Alaska’s North
Slope had been stymied since the Prudhoe Bay discovery in 1968 by lack of agreement
on a pipeline destination. Two plans were at loggerheads. One favored by many policy
makers envisioned the oil transiting Canada to a Chicago-area destination. Proponents of
this plan pointed out that the Midwest had no indigenous source of crude; those opposing
it cited the high cost of such a lengthy and expensive pipeline construction project.
The other plan, which ultimately became the Trans-Alaska Pipeline System (TAPS),
was to transport crude oil to the southern Alaska seaport of Valdez, where it would be
shipped to refiners by tanker. Proponents cited large cost savings and the timeliness of
the smaller construction project. Opponents of this plan contended that TAPS sponsors’
true intent was to export North Slope crude, a contention denied by TAPS supporters.
Midwest destination proponents asserted that exports would run counter to the principle
that U.S. oil should be used domestically and remain available for consumption in the
United States as a matter of energy security.
A pipeline from Prudhoe Bay required transiting a route where much of the right-ofway was on federal lands. Legislation was required to end what had become a stalemate
over the route. The 1973-74 Arab oil embargo brought a new sense of urgency to the
debate. As a gasoline shortage began to develop, a compromise — the Trans-Alaska
Pipeline Act (P.L. 93-153) — was achieved. This right-of-way legislation enabled the
shorter pipeline to Valdez, with the proviso that crude oil transiting the right-of-way
granted by Congress would not be exported.
TAPS was completed in 1977, and initial oil shipments began to flow by year-end.
With continued oilfield development on the North Slope, production climbed steadily for
10 years, peaking at 2.0 million barrels per day (mbd) in 1988. In subsequent years,
Alaska North Slope (ANS) output declined, falling to 1.5 mbd in 1995 and continuing
downward to current flows of under 900,000 barrels per day (bd).
Much ANS crude reached California, which is the nation’s third-largest oil producer.
During the mid-1990s, California produced about 800,000 bd. The combination of
California’s indigenous production, ANS crude, and foreign oil imports resulted in a
regional oil surplus. The local glut depressed prices for both California and ANS
producers. Since more crude was available on the West Coast than was needed there at
that time, about 300,000 bd of crude were shipped via the Panama Canal to the U.S. Gulf
Coast and U.S. Virgin Islands.
Congress Lifts ANS Export Ban
The West Coast oil glut elicited persistent expressions of concern from oil producers
displeased with what they perceived as artificially depressed prices. Early efforts to
achieve remedial action failed to establish traction until 1995, when low world oil prices,
a relatively benign level of net oil imports (8.0 mbd, in contrast to a current level
exceeding 12 mbd), and a supportive Department of Energy (DOE) coincided with
renewed legislative efforts in both Houses of Congress.
A June 1994 DOE study, Exporting Alaskan North Slope Crude Oil — Benefits and
Costs, found that exporting Alaska crude would increase producer receipts for both
California and Alaska oil. The increased producer receipts would be the result of
transportation savings realized by avoiding a trip through the Panama Canal.
Additionally, DOE predicted that larger producer revenues at the wellhead would result
in 100,000 bd more output from Alaska and California than would be the case with
continued export restriction.
Absent a conclusive case for the oil’s being needed in the United States, and with
no forecast cost and substantial projected benefits, export ban repeal bills in the 104th
Congress (H.R. 70 and S. 395) passed by large margins, 324-77 and 74-25 respectively.
The Clinton Administration supported ANS crude exports and the President signed P.L.
104-58 in November 1995.
With the export ban lifted, ANS exports totaling 36,000 bd began in 1996; they grew
to 66,500 bd in 1997, dipped slightly to 52,900 in 1998, and rose to a high of 74,000 bd
in 1999. According to unpublished DOE figures, during 1999, Korea (50%), Japan (36%),
and China (12%) imported nearly all ANS exports. The list of customers for this oil
remained the same throughout the period.
Before ANS exports stopped in May 2000, the result of ownership changes and
falling output, about 7% of North Slope output was shipped abroad. Viewed relative to
total domestic consumption of 19.3 mbd in 2000, these exports comprised less than onehalf of one percent. Net petroleum imports at the time were about 10 mbd; these exports
amounted to the equivalent of three-quarters of one percent. As an absolute quantity,
these numbers were not particularly significant.
While the export ban was under debate during 1995, the United States was already
exporting nearly 900,000 bd — 28% in the form of petroleum coke, which is used in
making steel. Other exports were cross-border exchanges of refined products, as well as
some crude, with Canada and Mexico. Trade in petroleum coke plus exports to Canada
and Mexico accounted for 69% of all U.S. oil exports at the time.
Impact of Exports on West Coast Prices
Alaska oil production peaked at 2.0 mbd in 1988, creating a crude surplus on the
West Coast. By 1995, when export legislation was enacted, output had declined to 1.5
mbd, when a surplus of 300,000 bd reportedly existed. Further declines lowered output
to present levels of about 900,000 bd. Coupled with declines in California’s indigenous
production and growing demand for petroleum products, whatever surplus had existed
On a separate track from crude supply, gasoline pump prices in PAD District 51
began to diverge from the nationwide average. In 1995, Energy Information
Administration (EIA) data showed West Coast pump prices to be only 5 cents per gallon
above the national average. But by 1999 West Coast gasoline was 15 cents per gallon
higher. When crude exports stopped in 2000, the average divergence for the full year was
12 cents; it narrowed further in 2001 and 2002 to 10 and 7 cents respectively.
Could the 74,000 bd that were exported before May 2000 have been a causal factor
contributing to the West Coast gasoline price differential of that time? While the oil
exported represented less than 3% of regional consumption — and was likely replaced by
imports at equivalent prices — exports could have contributed somewhat to the price
disparity. Highly inelastic oil markets can experience large price swings in response to
small changes in supply. When Alaskan oil exports ceased, the gasoline price differential
between the West Coast and the national average did decline, at least for a few years.
Platts Oilgram Price Report2 described the market dynamics that might have been
operative during the late 1990s and early part of 2000. Platts estimated the various
producers’ market shares, placing BP Amoco’s share at 470,000 bd, Arco’s at 360,000,
and ExxonMobil’s at 246,000. Six other firms held minor ANS production shares. BP
Amoco was apparently the only oil exporter. Arco and BP Amoco have merged, and as
part of that transaction, Arco’s ANS business was sold to Phillips. Phillips became the
second-largest producer of ANS crude, accounting for more than one-third of production.
The Platts article stated further: “The BP Amoco spokesman said even though
shipments to Asia only averaged 60,000 bd, the company was satisfied with the export
program, because it assisted in weakening the grip of what he called a ‘captive market’
for its crude in California.” This statement could suggest that California refiners had been
— or, without exports, would have been — paying lower than world market prices for
ANS crude. But for this contention to be valid, local petroleum markets would have to
be not fully competitive. Why else would West Coast refiners have paid world market
prices (there was no other choice) for foreign oil, and below-market prices for ANS
Petroleum Administration for Defense Districts were created in 1950, succeeding the Petroleum
Administration for War geographic aggregation of 1942. PAD District 5 includes Washington,
Oregon, California, Nevada, Arizona, Alaska, and Hawaii.
March 24, 2000, p. 1.
Local competitive conditions — if better understood — might help better explain the
reasons that producers have found it economic in the past to export ANS crude. But, as
part of the BP Amoco deal to buy Arco, Arco’s ANS properties were sold to Phillips,
which planned to use the oil in the United States and said it had no plans to resume
exports.3 And BP Amoco acquired and now operates what had been Arco’s substantial
California refineries, and now refines the previously exported ANS crude.
In addition to crude supply and price, there are many other factors contributing to
higher West Coast gasoline prices. Among them are a worsening shortage of refining
capacity and tough local environmental standards for fuel. These factors should have had
significant bearing even during the period of crude exports. In more recent years —
absent crude exports — they have become key factors related to the price differential.
Current West Coast Oil Exports
Oil export still remains a controversial issue on at least two counts:
Concerns about U.S. petroleum exports during a time of need and high
Concerns that the environmentally sensitive ANWR could be opened for
production on the grounds of energy security but instead produce oil for
With regard to current oil exports, during 2005, only about 243,000 bd of petroleum
were exported from PAD District 5, which comprises the western states, including Alaska
and Hawaii. No crude oil at all was exported. During 2005, 98,000 bd of petroleum coke
and 52,000 bd of residual fuel oil were sold abroad. Petroleum coke — comprising 40%
of exports during 2005 — is used in making steel and is not really a fuel. Residual fuel
oil (about 21% of exports) is not widely used on the West Coast. Some refineries have
difficulty fully converting this heavy fuel into other products, and this oil seeks a market
abroad. Some likely leaves the country as fuel for ships engaged in international
commerce. Only 9,000 bd of gasoline was exported.
The United States does export a total of about 1.1 mbd of oil and oil products; last
year only 41,000 b/d was crude oil. The amount of exports is significant enough to cause
concern among those fearful that the country is exporting oil in a time of high prices
when that oil is needed at home. Virtually all crude oil was traded with Canada in 2005.
About 17% of total petroleum is traded with Canada, 25% with Mexico. Canada and
Mexico are among the nation’s most important suppliers of crude oil; in 2005, they
supplied 2.2 mbd and 1.6 mbd of the nation’s gross total imports of 13.5 mbd.4 Any
exports to these countries are likely related to geographic considerations involving ease
of transport. And they are more than offset by the great importance of Canadian and
Mexican oil supplies to this country.
Platts, op cit.
DOE/EIA website at [http://www.eia.doe.gov].
Changing supply and demand fundamentals in PAD District 5 played a role in the
end of Alaskan crude exports. Production in Alaska fell by 600,000 bd between the repeal
of the export prohibition in 1995 and 2005. Most of that drop took place in the 1995-2000
period. California production also declined, albeit by a smaller amount than Alaskan
Increasing West Coast Demand
Demand for refined products increased steadily from 1995 through 2005. EIA data
show that total PAD District 5 demand rose 15% since 1995. This amounts to 400,000
Table 1. PAD District 5 Oil Demand, 1995, 2000 and 2005
Source: DOE/EIA website at [http://www.eia.doe.gov].
Decreasing California and Alaska production since the lifting of the export ban
totaled nearly 800,000 barrels per day for both states. Combined with the demand growth
during this period, the incremental need for imported oil has increased by 1.1 mbd. This
suggests strong PAD District 5 demand for oil, and suggests that market forces would
provide powerful incentive to use any extra crude oil production in West Coast refineries.
Table 2. Falling Crude Production in Alaska and California,
Alaska Crude Production
Sources: DOE/EIA website at [http://www.iea.doe.gov].
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