U.S. crude exports allowed under congressional deal on spending bill

The provision, which was brokered in an agreement unveiled by House Speaker Paul Ryan at a meeting of Republican House members late Tuesday, is expected to give United States oil producers unfettered access to the world market for the first time in 40 years, if the bill is ultimately approved by the House and Senate and signed into law by President Barack Obama. The house reportedly plans to vote on the $1.1 trillion government spending bill and a separate tax reform measure Thursday.

The oil export legislation could provide at least some salve for the wounds in the nation’s beleaguered oil patch, which has suffered mightily over the past year from a collapse in global oil prices amid a glut of supply. Rather, U.S. oil producers say the impact will come in the long term, as they find new markets, pump more oil and potentially hold down global fuel prices. This week, crude prices fell below $35 per barrel, down from more than $100 per barrel in June of a year ago.

Technology. U.S. energy companies have developed new techniques that not only free oil and gas from fields once thought unreachable, they are returning to oil fields that, using older technology, were thought to be long drained of all fossil fuels.

But recent changes in the world market have shifted Helms’ outlook, and he’s now projecting that lifting the ban could affect Bakken oil prices by $2 a barrel.

While many Democrats found lifting the export ban a bitter pill, Ryan could not resist a little gloating.

Ryan said it has been 40 years since the ban was implemented in 1975 amid the Arab oil embargo and petroleum shortages.

Ann Wagner a Republican Representative from Missouri said this proposal to lift the export ban of crude oil is huge and will have a far bigger effect that the building of the Keystone pipeline.

President Obama has previously said that he opposes a lifting of the crude oil export ban as it does not help meet environmental goals. Democrats said that the provisions would create tens of thousands of green jobs and reduce carbon emissions by a greater magnitude than lifting the export ban would increase them. “Allowing a five-year renewable energy tax credit extension is cold comfort to everyone who supports a forward-looking clean energy economy and an end to constant oil favoritism in Congress”.

Refiners have been divided on the issue, as exports of crude would increase their costs after a bounty of cheap domestic oil brought several years of surging profits. On Wednesday, a report from the U.S. Energy Information Administration surprised Wall Street by revealing that domestic inventories jumped 4.8 million barrels, much larger than a forecast for 1.42 million barrels. As well, refineries in New Brunswick and Quebec have been importing crude by ship from the U.S. Gulf Coast.

“It really doesn’t matter if we have an export ban or not because we need all the light tight oil we’re producing”, according to David St. Amand, president Navigistics Consulting, a maritime consultancy.

US oil explorers from Exxon Mobil Corp.to Continental Resources Inc. have been agitating for an end to the export ban for most of this decade as technological advances in drilling and fracking opened up vast, untapped reserves of crude. “Ultimately the USA consumer will pay a higher price, and the planet will have more pollution”.