Senator John Hoeven announced that the new year-end 2016 funding bill that is on track to pass Congress this week includes a provision he worked to include that repeals the decades-long ban on USA crude oil exports.
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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. “This will also lower prices at the pump by as much as 13 cents per gallon and produce an additional 1 million barrels daily if this ban goes away”. Present federal regulation prohibits corporations within the USA from delivery uncooked oil in another country, however there are exceptions to the rule. As the glut swelled, US crude sank to more than $27 a barrel below overseas prices. Heidi Heitkamp (D., N.D.), who has been one of the most vocal supporters of lifting the ban, which Congress first put in place in the aftermath of the 1973 Arab oil embargo. The latest study by the U.S. Energy Information Administration (EIA) concluded that lifting the ban will reduce the discount for light sweet crude oil produced in states like North Dakota and Texas and encourage investment in domestic energy production.
Tom Kloza, chief oil analyst at the Oil Price Information Service, said it will have “virtually no impact” on gasoline prices, noting that most studies – some by academics, think-tanks or paid for by the energy industry – have predicted only modest price declines of a few cents per gallon, which fall within regular ebbs-and-flows of the market.
Repeal may not provide an immediate boost to United States crude exports. The price of oil has plunged to its lowest levels in more than six years because supplies continued to rise as the global economy struggles.
In a recently published report, “Crude Oil Exports and the Louisiana Economy”, LSU assistant professor Gregory Upton of the Center for Energy Studies wrote that, “Lifting the export ban and allowing for free trade of all hydrocarbons can create an environment that allows for the Gulf Coast to become the epicenter for hydrocarbon trading”.
Lynn Helms with the North Dakota Department of Mineral Resource says lifting the oil export ban will draw down the 106 million barrels of oil now in storage in the United States. “This is a big win for America’s energy workers, manufacturers, consumers and our allies”, he said.
Longson added that when US producers return to ramping up manufacturing, exports might grow to be extra useful.
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An overhaul to Total’s Port Arthur refinery finished in 2011 was also tailored to the heavy, sour crude oil varieties. “The benefit will not only be seen in the oil counties, but rather statewide, as oil and gas revenues contribute roughly 40 percent of New Mexico’s state budget”.
