US Senate lifts 40-year-old ban on oil exports

“The U.S.is now the world’s largest producer of oil and natural gas, and Americans are enjoying an energy renaissance that has produced abundant supplies of domestic energy resources”.

The world is awash in oil, driving down crude prices from more than $100 a barrel 18 months ago to the $30 range today.

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”.

More important, any export in oil is at the moment unlikely to drive up prices domestically. Crude oil from shale regions like the Bakken in North Dakota and the Eagle Ford in Texas can now be shipped to overseas markets; it’s not even likely to be a good deal for consumers.

Opponents of lifting the export ban said the action would harm the environment and could lead to an increase in fiery derailments of crude-carrying trains.

“Low oil prices gave people the breathing space to not feel like we’re doing this at a time when gasoline prices are bumping around four dollars”, said Sen. Production and exploration companies argued the ban – imposed during the Arab oil embargo in the mid-1970s – was outdated and unnecessary.

According to the Department of Energy, the United States could become a net exporter of crude oil in the next decade or so.

For example, in exchange for Democrats’ support for lifting ban on the crude oil exports, Republicans agreed to extend wind and solar tax credits and authorize a conservation fund for three years.

The oil-export measure is at the center of a deal congressional leaders announced early Wednesday on spending and tax legislation.

President Obama signed the bill into law on Friday. 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. “It’s a big win for our manufacturers and for our foreign policy”.

The U.S. government doesn’t limit exports of refined petroleum products, and those exports have more than doubled since 2007, fueled by a boom in oil drilling.

Pearce said that schools, roads and hospitals throughout the state will see benefits with the increased oil and gas production associated with exportation. The spending bill contains a tax deduction for those refiners to help blunt any potential negative impact on them.

Not all refiners are convinced the new tax break will be enough to keep all those plants in business.

Representative Nancy Pelosi and some of her fellow Democrats had concerns that opening USA oil to exports would hurt independent refiners by raising the price of domestic crude to global prices.

The export ban had a few exceptions.

“That’s some unfinished business that we have to do”, she said at a press conference after Friday’s vote.