WASHINGTON -- The 40-year ban on exports of oil from the United States is poised to end, as the White House, Senate and House majority and minority leaders gave support to passing the $1.1 trillion omnibus spending bill that contains it as a measure.
In reaction to the oil embargo crisis, the United States had placed a ban on most exports of raw crude since 1975 as part of the Energy Policy & Conservation Act, with the goal of reducing reliance on foreign imports. But now that the United States ranks among the top global producers and relies less on imports, there has been growing pressure from the oil industry and some legislators to finally lift the ban.
According to a Bloomberg report, proponents appear to about to get their wish. Republicans had included language to lift the ban in the spending bill, which would fund the government until September 2016. Despite opposing the concept of opening up exports right as the country pledged a shift away from fossil fuels at the U.N. climate talks in Paris, Democratic leaders said they would support passage of the bill.
President Obama, who also opposes the idea of lifting the ban, said he would still sign the bill, partly because a separate bill poised for passage extends tax credits for renewable energy. These include extending a $1-per-gallon credit on biodiesel.
The House was set to vote on the spending and tax bills on Thursday, and the Senate is slated to do so on Friday.
“We have the best technology, the best oil and over time we will drive out Russian oil, we will drive out Saudi, Iranian,” Representative Joe Barton (R-Texas) told Bloomberg. “It puts the United States in the driver’s seat of energy policy worldwide. It is a huge victory.”
In a letter encouraging the Senate and House majority and minority leaders to support passage of the omnibus bill, the American Petroleum Institute (API) pointed to reported benefits of lifting the oil export ban.
“According to various studies, lifting the ban would create one million jobs at its peak in 2018, and add $38 billion to our economy, and lower our trade deficit by $22 billion and our federal budget deficit by $1.4 billion in the coming years,” the letter said. “And every major study agrees—crude oil exports would put downward pressure on U.S. gasoline prices, benefiting American consumers.”
Rep. Steny Hoyer (D-Md.), the second-ranking Democrat in the House, said while placing the oil-export language in the spending bill instead of the tax measure was not ideal, this would not stop most of his party colleagues from voting for the omnibus.
“We are trying to be as positive as possible because we must keep government open,” House minority leader Rep. Nancy Pelosi (D-Calif.) told reporters. “But we are going to make a knowledgeable vote about it.”
Separately, some analysts suggest that lifting the ban might actually increase oil imports in the near-term. That’s because the price of the U.S. benchmark West Texas Intermediate is approaching that of the international benchmark Brent, which has traded higher for much of the last five years. As the prices grow closer, refiners in the United States might look for overseas oil cargoes based on Brent to process if they are cheaper than WTI-linked oil.
“The spread between Brent and WTI has narrowed so much that crude buyers have started to look for the trade flow that’s the cheapest,” Peter Lee, an analyst at BMI Research, told the news agency. “Within the U.S., refiners accustomed to taking domestic grades will see that there are other options out there.”
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