The Repeal of Crude Oil Export Ban

Posted by Chris Leslie


Congress placed a moratorium on exporting domestically produced crude oil 40 years ago. On Oct. 9, 2015, the U.S. House of Representatives approved H.R. 702, a bill that would repeal what many supporters claim to be an outdated law. As typical with these bills, balloting toed the party lines. Since then, the lifting of the ban has become a key component of a broader tax and spending bill. Initially it was expected that any legislation to lift the oil export ban would be met by a promised Obama veto.  However, it is unlikely that the White House would veto this broader legislation, especially since it contains democrat-friendly provisions including conservations measures and an extension of solar and wind tax credits.  With oil falling through $40/barrel, there is renewed urgency within the oil industry (at least, the midstream and upstream sector) to lift the ban.  

Rep. Joe Barton, (R-Tex.), who introduced the original bill on Feb. 4, claimed this bill aids job growth by piggybacking on America’s energy boom over the past few decades. “H.R. 702 presents a rare opportunity to help the economy at home, enhance our influence abroad, and strengthen our national defense. All at no cost to the American people,” he said.

Opponents attacked the measure, claiming that the bill favors the oil and gas industry, but does not consider the impact on consumers, especially related to crude oil and gasoline prices. “We’ve heard arguments all morning to give Big Oil, the most profitable industry in the country, another multibillion-dollar break,” said Rep. Jared Huffman (D-Calif.).

The bill relieves all export restrictions on crude oil in the future; a feature some opponents have claimed is “horrifically breathtaking.”

Applauded by Other Organizations

Several trade organizations and non-industry business groups commended the passage of H.R. 702 in the House. Jack N. Gerard, president of the American Petroleum Institute, alluded to the benefits this bill had to offer America’s future: “This vote starts us down the path to a new era of energy security, saving consumers billions of dollars and creating jobs across the country.”

According to the Western Energy Alliance in Denver, overturning the ban results in over $265 billion in overall savings for consumers due to additional crude oil supply. The annual savings boil down to $391 per household. And in an economy still recovering from the worst economic downturn in decades, families welcome any additional savings.

On the contrary, opposition groups claim that lifting the restriction endangers communities facing oil extraction and transportation in their backyards, as well as the climate, as the industry continues to extract the nonrenewable resource.

Continued Industry Support for a Critical Energy Policy

Lifting the ban on domestically produced crude oil exports continues to gain favor in industry circles throughout the nation. John Donohue, President of the U.S Chamber of Commerce, believes the moratorium "prevents nationwide economic growth and robs the American people of good jobs."

Others cite economic factors to consider as well:

“It limits our economic growth and puts up a roadblock to increasing US exports,” claims Linda Dempsey, Vice President of the National Association of Manufacturers. She further postulates that the ban contradicts export goals, policies, and international organizations.

These varying arguments in favor of the legislation surround a common industry argument: that manufacturers need free access to the global marketplace and lifting the ban enables this reality. Many also claim it is at odds with our nation’s international commitments and demands within an ever-evolving global economy.

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Posted on Jan 12, 2016, 7:08:00 AM

Topics: Blog, Oilstorage, CrudeOil, oil, LNG