House passes bill freeing United States oil exports, Senate vote next

Exploration and production companies, many saddled with billions in debt and struggling to avoid bankruptcy after a 60 percent slide in oil prices forced them to halt most new drilling, had viewed exports as a lifeline of sorts. The White House signaled Wednesday it would support the legislation, which includes tax incentives for wind and solar energy. Ryan’s Republicans ought to worry about the political implications of forcing such a fight, because the last one did not do the party much good in the public eye.

“The major disappointment in the deal is the lifting of the ban on exporting USA crude oil”, said Rhea Suh, the group’s president.

US oil exports are “not going to happen Monday, but within a week or two, you’re going to see contracts be developed and a system come into place”, Representative Joe Barton, a Texas Republican and the House’s chief advocate for ending the export restrictions, said in an interview Thursday.

The immediate impact of the news has been to narrow the spread between West Texas Intermediate crude and more expensive Brent oil, the global benchmark. Most oil producing countries, particularly those in the OPEC, are operating a favourably subsidised economy.

Ironically, Louisiana is seeing a boom in the southwestern parishes because of the construction of natural gas export facilities.

But Democrats and activists had been defending the export ban as a way to limit Big Oil.

Democrats who backed the deal asserted that its provisions encouraging renewable energy were important for combating global climate change. They are expected to follow the Senate’s lead and pass the bill. Overall, though, we commend the leadership of both parties for seeking a resolution of the budget problems. The upgraded US refineries along the Gulf Coast can handle low-quality crude that can be imported from Canada, Venezuela and Saudi Arabia.

“Now that we have leveled the playing field, the United States finally has an opportunity to compete and realize our nation’s full potential as a global energy superpower”, said George Baker, executive director of Producers for American Crude Oil Exports, a group that formed past year to press lawmakers to open the trade.

The US is set to lift a four-decade ban on export of oil, a move that may benefit countries like India by giving them an option to purchase crude from non-Middle Eastern nations. Based on EIA data, the USA exported roughly 2.9 million barrels of crude oil from April through September.

“I’ve always been supportive of standalone legislation to lift the ban as my bill would have done, but I’ve long said that to actually build strong bipartisan support to end this outdated ban, we needed to reach a deal to bring along enough of my fellow Democrats on items like long-term extensions for renewable energy and conservation measures”, Heitkamp said. The firm represents producers, refiners and midstream companies.

In lifting the restrictions, the congressional negotiators included leeway for the White House to restore temporarily the ban in the case of a national security issue or if the supply to the domestic market is impacted.