The move to lift a four-decade ban on USA oil exports, which looked unlikely to succeed as a bill in its own right, is suddenly much likelier after Congressional leaders on Tuesday reached an agreement on a spending bill which includes lifting the ban as one of its components, according to Bloomberg.
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The tax measure would extend credits for renewable energy sources that begin construction by the end of 2016, and a $1 per gallon biodiesel credit – provisions sought by Democrats in exchange for lifting the oil export ban.
That caused global prices to sink, narrowing the discount for US crude and limiting the chances for producers to sell their oil at a better price in the export market. The Wall Street Journal reports that new technologies such as fracking and horizontal drilling have increased USA oil production 90 percent since August of 2008.
But Ryan said that both Democrats and Republicans had to make some compromises.
The $1.1 trillion omnibus being discussed is the result of new Speaker of the House Paul Ryan (R-Wis.) courting House Democrats to help secure passage as it is expected that the House Freedom Caucus, which is primarily comprised of members of the Tea Party, will vote against the bill.
But Democrats have concerns with lifting the ban for a variety of reasons, including the environmental impact and the potential effect on home heating prices.
“If we always get a lower price than the rest of the world, that obviously gives the advantage to OPEC and Russian Federation”, he said. Democratic leaders have made it clear during negotiations that the provision was a non-starter for them, and Republican leaders have already acknowledged that they need the support of Democrats to pass the package.
There’s “absolutely no chance” Iran will delay its plan to increase crude exports, Amir Hossein Zamaninia, the deputy oil minister for worldwide and commerce affairs, said December 13.
The U.S is now the world’s largest oil producer. You’re seeing this play out in a crash in high-yield junk bonds, many of which are filled with energy-related debt. The extra carbon use, the Center for American Progress theorized earlier this year, would equal 135 coal-fired power plants.
Despite disagreements over how long the renewable tax credits should be extended, Ebinger said he thinks “there’s enough support that I would certainly put it in the positive column as likely to happen”. The export ban was imposed during energy shortages of the 1970s but has been declared outdated by industry allies.
As recently as Monday, White House press secretary Josh Earnest told reporters Obama would veto any standalone measure that would end the oil export ban.
Indeed, over the past year, the White House has quietly allowed limited crude exports to Mexico, suggesting their opposition isn’t all that strong.
Environmental groups are also aghast at the idea of killing the ban because it would encourage more production. He has promised that text of the two bills would be posted for three days before they go to the House floor for a vote.
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The Energy Department argued that without the ban EOG Resources (NYSE:EOG), Cabot Oil & Gas (NYSE:COG) and other shale players – along with oil majors like Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX)- would pump out more crude and ship it to more lucrative overseas markets.
