House passes bill freeing U.S. oil exports, Senate vote next

Under the plan unveiled Tuesday, Congress will vote on the broad spending measure within days and then vote on separate legislation that would extend tax credits for wind and solar production, which are close to expiring.

Indeed, America is blessed with plentiful natural resources and has the most robust environmental regulations of any major oil producing country in the world.

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.

The U.S., seemingly awash in crude oil after an energy boom sent thousands of workers scurrying to the plains of Texas and North Dakota, will begin exporting oil for the first time since the 1973 oil embargo.

The bill, posted early on Wednesday morning, allows the US president to stop oil exports for one year if he or she declares a national emergency, or if the administration decides the exports are causing a domestic oil shortage or raising prices.

GOP and industry leaders have called the ban antiquated and applauded the proposal to lift it. That day ought to come, but today’s markets don’t seem to be moving much in terms of price for producers. “It is a huge victory”.

If the ban is lifted it will eliminate difference in price between the world crude price and west Texas intermediate, which is the oil produced here.

This week, crude prices fell below $35 per barrel, down from more than $100 per barrel in June of previous year. But traders in the opaque physical crude market say they can not find any overseas buyers in a depressed price environment. That’s why the United States continues to import crude oil. Due to a global glut in oil supplies, lifting the ban is not expected to lead to significant shipments for months or even years but it could give crude producers the increased flexibility they coveted.

The budget agreement will help fund critical forest restoration work that can reduce wildfire threats, protect drinking water and shield recreation sites, Herrick said. “But the effects are probably going to be pretty marginal”.

More important, any export in oil is at the moment unlikely to drive up prices domestically.

Ryan said United States producers would generate more than a million barrels daily, which means more American jobs and greater economic competitiveness in the global marketplace. Crude oil in storage is at 80-year highs, approaching 500 million barrels. Low global costs of oil has also reduced the relevance of lifting the oil export ban.

“So the fact is, yes, this is a legislative action that would require the lifting of this ban”, he said.

For now, the situation remains precarious for drillers.

The export ban was put in place in the 1970s to counter OPEC’s cutoff of oil to the U.S.in reprisal for American support of Israel. “You’re fighting last year’s battle here”, said Robert Campbell, an analyst for Energy Aspects Ltd.in NY.