DENVER | Republican Congressman Mike Coffman unveiled a measure he plans to introduce to Congress next week that would ban all oil exports from Venezuela to the U.S., despite certain GOP pushback and red flags from oil companies.
Coffman said the proposed legislation, dubbed the PATRIA Act, is a notable stand against the Trump administration, which has suggested the possibility of some sort of military intervention in Venezuela.
When asked whether he believed Trump’s military threat was an empty one, Coffman said he wasn’t sure but regardless it was the wrong approach.
“As a combat veteran I value the price of blood more than the price of oil,” Coffman said before his announcement at the state Capitol, admitting the embargo would likely have an effect on U.S. gasoline prices – though he said it was unclear just how much the legislation would impact Americans.
If passed, the bill is estimated to hit Venezuela with $10 billion in lost income. Coffman said it would deal a “devastating blow” to Venezuelan President Nicolas Maduro.
Coffman has applauded the sanctions the administration has so far levied on the country. Those sanctions focused on current or former Venezuelan government officials accused by the U.S. of supporting Maduro’s creation of a special assembly charged with rewriting Venezuela’s constitution — a move the U.S. says is an attempt by Maduro to shore up his grip on power.
The bill requires the embargo be lifted only when Maduro reinstates the National Assembly. Coffman said the goal is not a regime change, but rather to restore the legislative body that “people have been protesting and dying for in recent months.”
Nine companies, including Chevron, Valero, Citgo and Phillips 66, currently process Venezuelan crude at more than 20 U.S. refineries, most of them located along the Gulf Coast, according to data from the U.S. Energy Information Administration. Many of these refineries are designed for the type of heavy crude that Venezuela exports and replacing those supplies would be disruptive and costly.
An influential industry group whose members include the nine companies has written two letters to Trump warning there is no guarantee that other key sources of U.S. heavy crude imports — Canada, Mexico and Colombia — could provide enough additional supply to replace the Venezuelan oil. Many refineries would likely turn to Saudi Arabia but the higher costs associated with such a shift “could significantly impact fuel costs for U.S. consumers,” according to the letter by the American Fuel & Petrochemicals Manufacturers.
The oil industry is finding allies in the U.S. Congress, particularly among lawmakers from the Gulf states.
Coffman said he knows there will be pushback on the legislation, but he sees an oil embargo as a moral obligation and more favorable option than sending in U.S. troops.
Six Republican congressmen from three of the states that process Venezuela’s heavy crude — Texas, Mississippi and Louisiana — recently wrote a letter to Trump warning that banning Venezuelan oil imports would do more harm than good. While applauding the president for his efforts to counter “the disturbing decline of democracy” in Venezuela, the lawmakers, led by Rep. Randy Weber of Texas, said that it could jeopardize 525,000 refining-related jobs along the Gulf Coast.
Energy analysts, however, have been more circumspect about the effect on global markets and prices at the pump. A recent analysis by Wells Fargo Securities concluded that one impact would be to raise foreign heavy crude prices by about $3.50 a barrel. However, the ban would not affect demand for gasoline or reduce the overall supply of crude on the global market, as Venezuela would likely redirect its shipments to countries in Asia and elsewhere, albeit at a painful discount.
“We do not believe there would be significant impact on retail prices to U.S. consumers given that the net availability of worldwide crude oil volumes would be unchanged,” the Wells Fargo report said.
Associated Press reporter Joshua Goodman contributed to this report.