U.S. spending bill lifts 40-year ban on crude oil exports

Chairman David Porter said, “My fellow Railroad Commissioners and I have worked hard to overturn the ban, whether it be appearing before Congress, the Texas Legislature, or educating decision-makers in Washington that lifting the ban would unshackle the USA energy sector and further enhance our nation’s stature as a global leader in energy”.

“The facts are clear: lifting the ban is good for consumers, our economy, national security and energy security”, said Senator Heidi Heitkamp of oil-rich Nork Dakota. Lower prices help in the fight against ISIS, for which oil is the primary income source.

The ban on crude exports followed the 1973 Arab-Israeli War and a boycott by Arab oil-producing nations on selling crude to the US.

ExxonMobil, meanwhile, is headed in the opposite direction with a planned expansion to its Beaumont refinery that would focus on light crude oil extracted from the U.S.

Lifting the ban, however, is unlikely to have a significant impact on the already brimming global oil market, experts said.

American Petroleum Institute President and CEO Jack Gerard thanked the Senate for ending the ’70s-era crude export ban.

Christine Lagarde, managing director of the IMF, on Friday welcomed the U.S. Congress’ move to approve the IMF quota and governance reforms, saying that “it will strengthen the IMF in its role of supporting global financial stability”.

The narrow price gap “doesn’t encourage exports from the United States to many parts of the world” when transportation costs are factored in, Lipow said. With the increased use of fracking and other drilling technologies in recent years, US oil production has shot up almost 90% since August 2008, helping lower gasoline prices to levels not seen since 2009.

As a trade-off for lifting the ban, the spending bill includes tax breaks for solar and wind power and a pledge by Republicans not to block a $500m payment to the UN Green Climate Fund.

“In isolation, any one of these factors would come as a bearish shock to our 2016 outlook for the US oil market either by increasing supply (as in the case of lower exports and higher imports) or decreasing demand (as in the case of lower refinery throughput as margins come under pressure)”, said the note, seen by Reuters on Thursday.

The signing of the bill ends months of negotiations and has averted the possibility of a government shutdown, just as Congress finishes up for the year.