Oil export ban id dead – It took a compromise resulting from pressure to move forward with a “must pass” federal spending bill, but members of the U.S. Congress have apparently finally agreed to lift the four-decade-old ban on exports of domestic oil. The ban on U.S, oil exports was passed by Congress in the early 1970s following the crippling Arab oil embargo of 1973-1974.
Sources close to the negotiations say that Democrats got an agreement for temporary tax breaks to boost wind and solar development as well as social spending priorities from the Republicans in return for agreeing to lift the oil export ban.
Details on spending deal that will lift oil export ban
Lawmakers from both parties are meeting separately on Wednesday to discuss the $1.15 trillion 2016 spending bill that was negotiated by congressional leaders over the last two weeks. The current plan is to vote on the bill on Friday. If the spending legislation passes both the House and the Senate, President Barack Obama to sign the bill despite his opposition to several provisions including the oil export ban.
The spending deal hands the oil industry a huge victory just days after an international climate conference finalized a deal to reduce emissions from oil and other fuels, a deal that was opposed by the oil industry.
Analysts point out that independent oil companies such as Continental Resources and ConocoPhillips have been lobbying the federal government to lift the ban on oil exports for a couple of years now, saying that the ability to freely export oil would minimize market distortions, stimulate the U.S. economy and improve national security.
However, given U.S. oil and gas output is now declining due to the ongoing decrease in oil prices, oil sector analysts argue it could be several months or even years before notable volumes of exports are seen.
Keep in mind that most U.S. refineries are against reopening oil exports, arguing that they would be hurt if crude oil is shipped overseas to be refined. They also claim they would be “forced” to pass along higher prices to U.S. consumers. The U.S. government doesn’t limit exports of refined petroleum products, which have more than 100% in the last eight years..
To address these worries, the 2016 spending bill revises a current tax deduction for domestic manufacturing to allow independent refineries to deduct nearly all of the transportation costs involved in shipping their products.