Federal budget deal includes lifting 40-year crude export ban

Refiners in the USA are nearing capacity for refining light tight oil and there are not many major infrastructure upgrades planned that will, in the near-term, increase the capacity for refining light oil in the U.S.

Lifting the ban was “particularly important at a time when our industry is experiencing a period of extreme volatility and uncertainty”, Ryan Lance, chairman and CEO of ConocoPhillips, said in a statement.

The Taylor Woods note said futures of US crude’s West Texas Intermediate (WTI) benchmark 0#CL: were trading above global benchmark Brent 0#LCO: through June 2016, even as USA crude inventories stood at 33 percent above 5-year averages.

The ban on the export of crude oil is a relic of 1970’s policy, put in place over concerns of domestic energy scarcity.

But those days are over. There’s only a $1.50 difference right now.

With the end of the ban, all 9.2 million barrels produced in the United States a day and the 490.7 million barrels stockpiled commercially are available for export.

Earlier this year, the Energy Department said that lifting the ban would boost the USA economy and could help lower gasoline prices, echoing what economists have being saying for years. It now moves to the Senate, where it is expected to pass.

Pelosi on Friday said Democrats walked away with a victory, in the trade of oil exports for environmental goals.

But, Upton wrote, lifting the ban may spur investment to expand the Louisiana Offshore Oil Port to allow for imports and exports, which would create “a two-way trading hub” that could shift global focus to Louisiana’s Gulf Coast, making it a “global hub” for the industry. Global airstrikes to counter those terrorists, who have sold oil to raise funds, have destroyed oil facilities.

Also, US producers could have a relief in the depressed energy market due to higher oil prices.

It could also take more than a year to work off the overhang in inventories in the U.S.as well, said a note today from Marwood Group Research.

The provision in the package “prohibits any federal government official from imposing or enforcing any restriction on crude oil exports except in certain limited instances such as a national emergency declared by the President”. Lisa Murkowsi (R-Alaska) and Heidi Heitkamp (D-N.D.), whose home-state producers – battered by low oil prices – will fetch somewhat higher prices overseas. She said members of the Progressive Caucus believe the plan is weighted too heavily toward aiding corporations, while other Democrats want more help for financially troubled Puerto Rico. Back then, the conventional wisdom was that there is a finite quantity of oil in the world, and we pretty much knew where it was. For decades after the embargo, US oil production declined as investment waned and existing wells matured.

“This is the biggest deal for addressing climate change that we are going to see”, Heinrich said in an interview. “Lifting the ban may be good for oil companies in the United States, and it could potentially be useful if USA producers chose to selectively export oil to allies in an event of crisis”.