[Congressional Record Volume 141, Number 61 (Monday, April 3, 1995)]
[Senate]
[Pages S5079-S5080]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


              EXPORTATION OF ALASKAN NORTH SLOPE CRUDE OIL

 Mr. PACKWOOD. Mr. President, I would like to express my deep 
concern about S. 395, and other similar legislation which would permit 
the exportation of Alaskan North Slope crude oil. Lifting the ban would 
cause severe economic strain in Oregon and Washington, and could raise 
the Nation's gas prices as well as jeopardize national security.
  In 1973, Congress passed legislation authorizing construction of the 
Trans-Alaska Pipeline System. As part of the agreement, we required 
that none of the Alaska North Slope crude be exported unless the 
President and Congress found that it was in the national interest to do 
so. In imposing this restriction, we made sure that no individual oil 
company would decide that their interest in profit was more important 
than the national interest to preserve our economy and our national 
security.
  Congress is being asked, by the sponsors of S. 395, to lift the 
restriction. Mr. President, I understand the potential for significant 
economic benefits for both Alaska, and the oil industry, if this ban 
were lifted. The economics are simple to follow. Alaska receives money 
from oil produced in the State based upon the wellhead price. The 
wellhead price is figured at a price less transportation. Thus, the 
lower the transportation cost, the more money Alaska will receive. If 
the oil can be transported to Korea, as it can without the restriction, 
cheaper than it can be transported to the United States, exports will 
generate more revenue for Alaska.
  My primary concern is that, while lifting the export restriction will 
enhance Alaska's oil-rich economy, this comes at the expense of 
thousands of lost American jobs and a weakened domestic tanker fleet, 
all with particular impact in my home State.
  Passage of the 1973 export restriction on Alaskan North Slope oil 
ensured that U.S. repaired vessels would be carrying U.S. crude oil. In 
1976, realizing the increase in the demand for large repair facilities, 
citizens of Portland invested $84 million in a shipyard expansion 
program to handle the repair needs for the Alaskan north Slope very 
large crude carriers. Today, 60 percent of Portland's current ship 
repair work comes from these tankers. The 1973 restriction reassured 
Portland that there was a market out there for shipbuilding repair, and 
Portlanders took a big risk in providing this market. Today, between 
500 to 800 family wage jobs in Portland have been directly supported by 
the repair needs of these large crude oil tankers, on top of another 
1,000 jobs that are indirectly connected to the port's tanker repair 
activities.
  S. 395 does have a provision which makes it mandatory that any tanker 
used to export Alaskan oil would be U.S. owned and operated. And 
according to U.S. maritime law, any U.S. flagged vessel seeking repairs 
overseas would be assessed an ad valorem penalty of 50 percent of the 
repair cost. While this sounds as though U.S. ships would have a 
disincentive to seek overseas repairs, this simply will not happen. Not 
only are loopholes available where virtually any tanker can seek an 
exemption from the 50 percent assessment penalty, but because the U.S. 
ship repair industry is faced with strict labor laws, environmental 
compliance laws, minimum wage standards, and labor union demands, it is 
still more cost effective, even with the penalty, to seek repairs 
overseas in markets where no strict compliances exist. In addition, 
according to the new shipbuilding agreement being prepared by the 
Organization of Economic Cooperation and Development, we may even lose 
the right to assess an ad valorem 50 percent penalty. Nevertheless, 
with or without penalty, S. 395 serves to increase the incentive to 
repair ships in foreign yards by making it possible for ships to take 
revenue-producing cargoes of Alaskan North Slope oil to the Far East 
prior to undergoing repair. This incentive to seek repairs overseas 
will not only cause serious environmental risks, but will virtually 
destroy the ship repair industry in Portland, as well as the rest of 
the entire west coast. As many as 10,000 maritime and 
 [[Page S5080]] shipyard jobs could be lost. Let me be crystal clear, 
there is no true disincentive to seek repairs in foreign ports by U.S. 
tankers. As a result, we will witness the demise of the U.S. tanker 
repair industry in Oregon.
  Furthermore, lifting the restriction could increase our vulnerability 
to outside influence on U.S. foreign policy. Our Nation may become more 
exposed to foreign pressures, particularly from the volatile Middle 
Eastern nations. This poses a great danger to our ability to 
successfully maintain our independence in global politics.
  Mr. President, in conclusion, there is no doubt that lifting this 
export restriction will hurt the American merchant fleet. It is going 
to hurt the ship repair yards on the west coast, it is going to raise 
the cost of crude oil to the United States, it is going to threaten our 
national security, and it is going to cost thousands and thousands of 
American jobs, particularly in Oregon. I do not find this to be in the 
national interest, and I am confident that my colleagues will 
concur.


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