United States lifts 40-year-old ban on oil export

“This may help the producers get a higher price exporting it to Europe, where refineries are better attuned to light crude”, he said.

“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 previous year to press lawmakers to open the trade.

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

The provision is part of a spending bill that will fund the government for the next year and is expected to be voted on and passed by the U.S. House of Representatives and the U.S. Senate before the end of this week.

The ban was first imposed in 1975 as the United States was reeling from the 1973-1974 Arab oil embargo, which dealt a heavy shock to the U.S. economy and sent global prices shooting up.

And in regard to national security, should the US need to stop exports again – in the event of a crisis – the president could again halt them, according to the agreement.

“I don’t think it puts them in any danger”, said Tom Kloza, global head of energy analysis for Oil Price Information Service.

Drillers have said lifting the ban would increase US oil security and give Washington’s allies in Europe and Asia an alternative source of crude beyond OPEC and Russian Federation. If so, this would create an estimated 1 million US jobs and it would add $170 billion annually to US GDP, Speaker Paul Ryan said. “We’re providing you can actually enacts significant, long-term reforms-achieve conservative policy goals-and get them signed into law”.

Additionally, oil exports aren’t banned totally. Environmental groups including the Sierra Club opposed ending the crude-export limits, saying that any increase in oil product would exacerbate greenhouse gas emissions. To address the refiners’ concerns, expressed most vocally by Democrats from the Northeast, where several refineries are located, the spending bill changes an existing tax deduction for domestic manufacturing so independent refineries can deduct most of the transportation costs associated with their products. That would have cost the region thousands of jobs.

“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. “Once you lift it, it’s hard to reverse it”.

The export ban had a few exceptions.