What You Need To Know About The Crude Export Ban

Gregory Hill, president of USA oil independent Hess Corp (HES.N), said this month that ending the prohibition would boost domestic crude prices by about $3 a barrel, or about 8 percent, from around $36.

House Republicans announced a deal late Tuesday between the GOP-led Congress and the White House on a trillion-dollar, year-end tax and spending package to fund the government through fiscal year 2016. That 1975 law is to be repealed as part of the “omnibus” federal budget legislation, awaiting final votes after a lot of dealmaking by the leadership, particularly new House Speaker Paul Ryan of Wisconsin.

The spending deal hands the oil industry a huge victory just days after an global climate conference finalized a deal to reduce emissions from oil and other fuels, a deal that was opposed by the oil industry.

Analysts agree that eventually, the end to the ban on exports could provide a market for U.S. crude oil in foreign countries that have refineries equipped to handle the kinds of oils most commonly found in the U.S. It would give them another source for oil if their traditional markets, heavily concentrated in the Middle East, face political instability.

“The US 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”.

Opponents of lifting the ban, including many Democrats in the Senate, say it would put oil refining and shipbuilding jobs at risk and more drilling would harm the environment and increase the number of trains carrying crude oil.

ExxonMobil, meanwhile, is headed in the opposite direction with a planned expansion to its Beaumont refinery that would focus on light crude oil extracted from the U.S.

“If we export that stored oil, then the change in prices reaches North Dakota producers nearly immediately”, Helms said. The spending bill is seen as vital to avert another government shutdown and to keep many popular tax breaks and spending programs in place.

“Lifting the oil export ban is very important to our industry to enable them to compete on a global basis”, said Senator John Hoeven.

“Lifting the ban on crude oil exports is a triple win – it will create jobs and grow our economy”. This despite the fact that a September 2014 poll for voters show a 68% support from Americans for keeping oil in the US.

The crude oil export ban was created in the 1970s during the Arab oil embargo. Companies were allowed to export oil to some countries with special approval, and exports to Canada have increased in recent years.

The U.S. Congress voted on Friday to repeal a 40 year old ban on exporting domestically produced crude.

The Wall Street Journal says the opposite would happen, writing, “Gasoline prices in the US are correlated to the global price of crude oil”.