This page has been archived and commenting is disabled.
Congress To Lift Four Decade Oil Export Ban: Will It Impact Crude Prices?
A little logrolling is better than brinksmanship and legislative gridlock we suppose and thanks to GOP concessions on tax credits for wind and solar as well as a three year reauthorization of a conservation fund, Republicans were able to include a measure that lifts the 40-year old ban on crude exports in a package of spending and tax legislation that funds the government until September of 2016.
As Bloomberg reports, “House Speaker Paul Ryan told fellow Republicans in a closed-door meeting Tuesday night in Washington that leaders had reached a deal pairing a $1.1 trillion spending bill with a separate measure to revive a series of expired tax breaks.”
“I think we’ve been pretty clear we’re not going to have a shutdown,” Ryan said on Tuesday, tacitly acknowledging the reputational damage the party suffered in 2013 when bickering over Obamacare brought the government to a virtual standstill. “That’s the way I think Congress ought to run,” he added. “Let’s get back to legislators legislating. Let’s get back to actually doing things methodically, deliberating. We call this regular order around here — I call it democracy.”

(Yes. Paul wants more of that.)
Foreign sales of refined products (like gasoline) were allowed under the ban - in place since 1975 after the Arab oil embargo - and as WSJ notes, “a certain type of light oil is also already starting to flow overseas thanks to permission granted in 2014 by the Commerce Department, which allows producers to reclassify a certain type of oil as a refined fuel, similar to gasoline, which is legal to ship abroad.” Exports to Canada (which is exempt from the ban) have increased ninefold to 400,000 b/d since 2008.
The inexorable decline in crude prices served as the impetus for reviving the debate around the export ban. As The Journal goes on to recount, “a dramatic drop in oil prices, hovering below $40 a barrel, helped prompt lawmakers of both parties to consider pairing renewable energy support with oil exports, a type of grand Washington deal-making that hasn't been seen for years on the highly divisive issues of energy and environment.”
“We have the best technology, the best oil and over time we will drive out Russian oil, we will drive out Saudi, Iranian. It puts the United States in the driver’s seat of energy policy worldwide. It is a huge victory.” Texas Republican Joe Barton declared.
President Obama has said he would veto separate legislation lifting the ban, but isn’t likely to oppose it as part of a larger spending and tax deal.
“We oppose legislation that would lift the ban on the exporting of American crude oil. But we certainly do want to see Congress — and hopefully they will in the context of this budget agreement — make the kinds of investments in renewable and clean energy that are good for our economy and have the potential to create good American middle-class jobs down the line,” White House press secretary Josh Earnest said earlier this week.
The timing leaves something to be desired. “By design or not, the agreement hands the oil industry a long-sought victory within days of a major international climate deal that is aimed at sharply reducing emissions from oil,” WSJ points out. “Doing it the week after the solemn and pious talk about saving the planet is not like some parent who smoked dope in the ‘70s warning their daughter about drugs — it’s like a parent who is currently high warning their daughter about drugs. You might as well hold the launch party for your vegetarian cookbook at a steakhouse,” Bill McKibben, the co-founder of the climate change group 350.org wrote in an op-ed for The Hill.
As for the impact on global markets, OPEC’s Secretary-General Abdalla El-Badri said Tuesday that "any change in U.S. oil policy will have 'zero' impact on global mkts because the country remains an importer."
In the grand scheme of things, you're really just shifting inventory around, Virendra Chauhan at Energy Aspects in Singapore says: “The deal to lift the crude ban is a significant change in U.S. policy, but in terms of the near-term impact on prices, we expect that to be blotchy and sentiment driven. All that you’re doing is transferring the glut from the U.S., where most of the storage capacity is, to elsewhere in the world.”
"Large volumes of crude are unlikely to flow out of the US as soon as the restrictions are lifted," FT writes. "The spread between the price of West Texas Intermediate crude, for delivery in Oklahoma, and internationally traded Brent is only about $1.25 per barrel, meaning that any benefit for US producers from selling in world markets would be swallowed up in transport costs."
"WTI would have to be at least $4 below Brent for exports to work, depending on the cost of shipping," Bloomberg wrote earlier this week, citing Energy Aspects analysts. That means spreads would have to widen to make exports economical. "This is going to end up ultimately being bearish everything," Citi's Seth Kleinman says. "You’re losing on the Brent side, and it’s not clear to me what you’re gaining on the WTI side. In oversupplied market, opening up the export arb changes not exactly nothing, but not far off from nothing."
In any case, “it’s definitely a negative for Brent," Kleinman concludes, "as U.S. crude enters [and already] oversupplied global market."
As far as where we go from here, the government is funded through the end of today. The House will likely pass a stopgap bill to fund the government through next week in order to give Congress time to consider the deal.
We'll close with a quote from Missouri Republican Ann Wagner who says "lifting the oil export ban is huge [and will] have a much bigger effect than building the Keystone XL pipeline."
- 62 reads
- Printer-friendly version
- Send to friend
- advertisements -


So ISIS will now be buying oil from Cushing & then selling it to Israel thru Turkey?
This is a horrible idea. It was banned for a reason, so that we wouldn't sell our resources off leaving our children with nothing to show for it.
Actually it's wicked smart......we're only selling it for gold.
Hopefully someday we'll be able to reopen Fort Knox.
Where do you see that? If anything they will be taking US Treasuries.
Well of course because the most conservative thing to do is exhaust all your own natural resources before plundering others oil
So they decide to do this AFTER oil drops to all time lows? Why weren't we doing this with oil over $100? Sigh...
"...All that you’re doing is transferring the glut from the U.S., where most of the storage capacity is, to elsewhere in the world...”
All that you're doing is transferring the resources to the countries that still produce stuff and need it.
After you ass-rape the U.S. middle class, export their manufacturing jobs, drive their education and healthcare costs through the roof with fucked-up policy and turn as many of them possible into bartenders, waitresses and debt slaves... well, guess what? The U.S. doesn't need any God-damn oil because we produce nothing and have nobody that's willing to buy it.
I'm thinking about voting for Israeli-firster Trump because he, more than any other candidate, understands that former middle-class Americans are a great source of english-speaking bartenders, waitresses and maids for his casinos. He understands the real place of American labor in the new economy - fucking service jobs in casinos.
This puts more pressure on Vlad.
and the domestic refiners.
Exacerbates global oversupply, puts downward pressure on oil price, reduces Russian margin on chief export.
The U.S. just became a competitor to Russian oil.
The US can keep selling until US reserves empty, unless the plan is to buy low and sell even lower just to show Russia who is boss. In the end, the US has fiat USD and Russia has physical oil and gold. What happens when the oil producers say 'fsck this, let's trade oil for rubles, yuan, gold, anything but USD'? /rhetorical
The fracking industry has been destroyed. The LNG industry is on its way out. The Saudis are raising taxes to cover their losses. Meanwhile, Russia is budgeting for a lower oil prices and expects low prices to hold for the next 7 years.
The United States cannot drop a bomb on Moscow at this point in time, no matter how much money it costs.
It can, however, drop oil into the global marketplace, despite the costs of doing so.
P.S. - I recognize that Putin is a folk-hero to the anarchist community, but surely you wouldn't begrudge me giving you an honest opinion about the motives of ye olde USA in this case.
How does it put pressure on Putin?
Someone should teach you plebes how to explain yourselves.
There is a worldwide oil glut, that is why the price is so low. No one is going to buy from the US, because that means using their $$$$ in the place that will swallow it up.
The only way this makes any sense is if there is a foreign interest in bankrolling the removal of US resources at a discounted rate. My money is on the Tribe.
$10.00 crude.
Fractal consequences.
And this will only mae oil harder to reach that price, it will go up, and the best part is that the new base (WTI) will push it even further up.
We're a net importer. This is nothing more than rearranging the deck chairs.
Exactly why I wanted to know why or how this pressured anyone other than the consumer of fuel here in the US.
.
"“We have the best technology, the best oil and over time we will drive out Russian oil, we will drive out Saudi, Iranian. It puts the United States in the driver’s seat of energy policy worldwide. It is a huge victory.” Texas Republican Joe Barton declared."
NidStyles, just a small question: does anybody in the US criticize this Texan for framing a business proposition like a declaration of war?
no? then perhaps, just perhaps... you know, the old question about who is not criticized and where. you usually point elsewhere, remember?
I don't even know who in the fuck that is. I'm not in Texas, so I don't follow Texans. I don't honestly give a shit about it either, as this is mere distraction from the real game.
The real game is the cultural power struggle.
Sounds like a middle-eastern war is on the horizon.
"get back to legislators legislating".....as scary as that thought is, I'm not sure what he's suggesting. Congress shouldn't have budgetary responsibilities like every other manager of any shape and size with a real job?
Okay....let's go with that. Let's create another branch of government that is purely budgetary and they get to give Congress a fixed amount of money every year. Then, the "legislators" get to fight over a pile of cash without debt.
Yes. Someone doesn't want us to have any resources at all soon. The same thing is going on as we send 'excess' food overseas.
Time to fill your cupboards guys, while we still have time. Things are going to get one fuck of a lot worse before they get worse.
If reports about the tanker fleet are true, how much will it cost to export oil to places that are awash in it?
"What if they lifted a ban and no one came?"
This looks more like a case of leaders creating the illusion of doing something instead of doing something. And I'm being overly generous with using the term "leader" here.
Freaking LOL!!!!
The US is the worlds #2 manufacturer only being surpassed by China in 2010. The small plane manufacturers employ tens of thousands. Over 50 auto assembly plants plus their suppliers. #4 in the world for steel mfg. John Deere and Caterpillar each with multiple plants pumping out farm and construction equipment and sateillite plants to make parts. GE with jet engines, locomotives, and top dollar medical equipment. Texas manufacturing is in the tank because they are heavy into equipment for oil. Plenty of mfg by the MIC to supply the war machine and guns for the public. All those military ships and planes made in the USA. We could go on all night but we still manufacture plenty. Here in SE Wisconsin mfg plants having been springing up all over in the last 10 years though almost all are medium to small. The big problem is the US has given away the electronics that almost everything needs to SE Asia. As of a few years ago the War Department operated their own chip plants on US soil but haven't heard if they are still operating. By giving away the electronics it would be ironic if China won the next war by pushing a button and all US military electronics melted down.
In the last few years I bought a new washer, dryer, water heater, furnace and AC all made in USA. Sided the house, installed new windows, and put on new roof all made in USA products.
Congress to lift forty year ban on US oil exports? Will it impact the price of crude? Well, yes, but I would be seriously doubtful of investors (speculators) if they were to assume that this would guarentee greater than marginal increases to liquidity, volume, and capacity in the long term for the industry. That type of speculative activity should be fueled by technological or scientific advances within a firm or a given industry, as those have greatly lasting and real effects on the market. Relying on events that are politcal or legal (in the sense of M&A's) to advance an industry and break production paradigms is misleading to investors, to say the least.
However, on a more sinister, DØØM-filled note:
Well, geez, with Turkey in the process of being brined and, eventually, basted, I do find it generous of the United States congress to support the ability to market our crude products abroad! Hell, maybe we can see a picture of a Mobil aviation grade oil drums on the back of a H2 Hummer (24" after market rims still intact) driving through some Bãdiyat Ash-shãm scenery.
I've been bad this year, Santa. Will you not grant me this, then?
How do you figure Dollas are gold?
Wishful thinking on many of our parts.
This article above combined with this article:
http://www.zerohedge.com/news/2015-09-09/chanos-vs-icahn-famous-short-se...
can only lower prices of LNG to be competive.
http://fuelfix.com/blog/2015/07/14/most-u-s-lng-projects-wont-cross-the-...
Where does it say gold anywhere?
That's what I thought, it doesn't.
Don't worry, by the time the dwindling and small reserves of the US die down you can be sure the US will not exist or your children's children will be slaves, which is something most of the world is looking forward to.
They will regret it after it's done with.
I wish there was an end to dumb and dumber, but we have dumberer, dumberest, half-wit, ignoramous, and embecile still available.
I'm gonna make this real simple for all y'all...
- ever tried to build a refinery in the USA? within, say, the past 50 years?
- if you can't refine the stuff as fast as it comes in, it has to be stored somewhere
- the USA is basically out of places to put the stuff
- so, you can't store it, you can't refine it quickly and export the resulting products, where's the blow-off valve?
- answer: you have to lift the crude export ban
Q.E.D.
The lack of expanded refinery capacity is all about the cartel's wish for price controls by strangling supply. Environmentalists are just the "useful idiots" in this case. There is no incentive to expand supply especially now with the increased collapse in demand for refined products.
Idiots. Gotta get that price up even though demand for the commodity is flat at best. Should be good for a killer 2016 Christmas sales season.
"I call it democracy.” What a fucking tool. I can tell you that a majority of the people in this country would actually not agree with lifting the ban. I call the decision was based on bribery and not democracy.
You're a little fucking late.
Assholes.
Welcome back, Mr. Skilling!
Your tax dollar$ at work ....
“Let’s get back to legislators legislating. Let’s get back to actually doing things methodically, deliberating. We call this regular order around here — I call it democracy.”
Fuck'en clueless retard! WE ARE A CONSTITUTIONAL REPUBLIC! NEVER WAS A DEMOCRACY NEVER WILL BE! the whole Democracy thing is nothing but a propaganda tool.
Hey now. He's a politician. He's paid to interpret the constitution and do what’s right for the highest bidder. Not know what kind of governmental system we have. That's for the losers that teach political science, which I don't remember which level you learn the proper way to hid bribes. Might be sophomore level.
From my perspective, it looks like he is paid to trample on the Constitution, and accordding to the Constitution, the ones that are paid to interpret are teh Supreme Court Judges, not Legislators and much less Politicians. You might be right there around Junior High on your understanding and very High on something that is not good for you.
Indeed BoR.
Ryan's statement alone stands as a testament of how supremely ignorant of their primary repsonsibility, out politico-corporate captives are.
In short: It's Over. Let's hope we can make it to the other side and rebuild again after the carnage.
Haha ! That will please the Sauds!
Moar oil on the market?
Hells bells! Only WE are allowed to do that!
US is importing 7.5 million barrels a day today. So what is this talk of exporting oil?
it's inflationary
the only thing that make sense is for a long period WTI was getting a much cheaper price than Brent and WTI is better qualtiy which made no sense except for the fact that you couldn't export it, so this is where I think they are coming from
I just figured it was due to all the new fresh 'donations' to him from the oil lobbyists helping him make up his mind.
Now you understand. And if you continue to think you will notice that those oil barons that sent their lobbyists, do not care about the US, because they hold no allegiances, and it is in their plans to destroy the US, and to set up shop somewhere else, particularly now that the US oil reserves are not that big.
Finding a profit has no allegiance.
Patched it for you.
You'll have to find a specialist to fix it for you.
It was already good, it is not about profits, but power which is not only about money.
Internationalists do not care about boundaries, that iwhy they are internationalists.
" So what is this talk of exporting oil?"
Welcome to the land of fiat oil. The Fed can just print it on demand. /sarc
This is like every other plot they've hatched; for example, they changed the nature of bankruptcy law prior to loading people up with debt. This time, they've set up a system whereby the oil companies can profit massively as soon as some supply somewhere is disrupted. Expect a disruption; my guess, Saudi is about to be bombed by...you pick the scapegoat...
A fart in the breeze.
Garlic in the gas ?
Where's that shovel ready Keystone pipeline ?
what if this is all a ploy to actually backdoor the pipeline? 'we can't export w/o pipelines'!
You are going to sell domestic oil into a world-wide glut of oil? Why and to who?
Let the owners of the oil .... market their oil .... as best they see fit ?
You don't get it - they are not really selling physical oil. This just lets the big banks sell Paper WTI Oil!
SHIT, never thought of that. Those motherfuckers really are a creative bunch of cockroaches.
Planet of the Burocunts ?
"Capitalism doesn't need to be corrected .... it needs to be understood ?"
"The problem with the world .... is the unequal distribution .... of Capitalism !" Rush Hudson Limbaugh
Under Boehner we had deals negotiated in secret, required Democrats to get passed, and angered conservatives.
Under Ryan-O we have a deal negotiated in secret, requiring Democrats to get passed, and angers conservatives.
My have times changed!
Just, no. No to you and no to all of that. Go home, leave me alone already.
This will make the price go up, The US is by far the biggest consumer, and by eroding it's internal supply, it will create a virtual demand, which will increase prices. Very smart on their part.
"virtual demand" - what kind of demand is that - do I make believe my computer needs gasoline?
You do this with gold and silver all of the time .... so now, think about that glut of oil .... yes, some of it is stored in tanks inside the US borders ... but who OWNS it? Can you find out? How much is owned by US oil companies? by US pipeline companies? How much by the TBTF banks? How much by Chinese businessmen eager to get their money out of their country and away from those who can take it away from them? How much by ISIS, by the Kurds, by Iraq, Iran? How much is rehypothecated, over and over and over again, as collateral for loans? At waht price was the oil valued when the loans were made?
Get busy, Tyler .... inquiring minds want to know .....
Mommy spoon fed you between suckings, didn't she?
Hey, that's good news. We don't need ME oil. Can we now get out and let those fuckers eat each other?
Well, you need much more oil than US oil, so it has to come from somewhere, and Venezuaela and Canada is not enough, does this mean you finally want Russian Oil?
Oil is oil; does it matter what language its producers speak? If We have so much that we can sell it off at current prices, then why do we need to import it from anybody?
It keeps USD in play as world currency.
http://www.forbes.com/sites/billconerly/2013/10/25/future-of-the-dollar-...
Those oil guys are so altrustic.
Could it be (oh, horrors!) a scam?
Because your production in no way makess up for your consumption. Is that simple.
Congress is always closing the barn door after the animals have escaped. They are no smarter than your local school board. They are not proactive, they are reactive and as a result, they are always a day late and a dollar short.
Oil prices are going back to where they were in 08. We had an abundance of oil then. That abundance was the byproduct of demand destruction. The economy contracted. After the contraction, conjured money brought on the fracking and tar sands miracle. These developments were not the result of market forces; they were the result of hot money funneled into these projects by linier thinkers who thought that the price of oil would continue its parabolic climb to the stratosphere. These geniuses never considered an economy built on twenty dollar oil could not survive on hundred dollar oil.
The glut will continue until the contraction has thrown more players out of the market. At some point the market will again momentarily stabilize and we will see a smaller pool of players drive the prices up again. Then the cycle will begin again. We are in what Kunstler described as the long emergency. Detroit is the model of the future. At some point, we reach Liebig’s Law of the Minimum and the system breaks.
Yet another brilliant plan from the people who created ISIS, sell all of our oil at record low prices. The destruction of the US is going according to plan.
Just in time for US producers to bankrupt and be bought out....and prices to return to normal.
As an aside the Brits are paying a "low" 89.9 pence for a litre of "petrol". Doing the math this comes out to 3.48 British pounds per US Gallon, or 5.67 US dollars per US Gallon. Since the price of a barrel of oil is pretty much the same world-wide the difference is in taxes? If so, what do the brits spend the money on?
Probably health care and education. We spend a lot more on health care and education here in the US, but rather than routing the money through government directly, we have to grease a lot of profiteers, as well and the government, and our health care and education is a lot worse than it is in the UK (unless as a US citizen you decide to pay a whole lot more than most Americans, and exponentially more than any Limey has to pay).
Sure, in the UK the hospitals aren't very nice and you have to wait a while for appointments and procedures. Unlike in the US, where the hospitals are very nice, the executives are much wealthier, and you have to wait a long time for anything that isn't very, very lucrative for the providers.
Obviously the Limeys haven't figured out how to fleece their sheep and tell them how clever and independent they are so they demand to be skinned rather than just fleeced.
Look out for the next wave.
MASSIVE subsidies to Oil and Gas industry.
All the turmoil in the world currently, is about energy and who will supply it.
Seeing as the US currently imports at least half the oil we use, obviously this is some kind of scam. But what kind of scam? Since the spread between Brent and WTI is really small right now (~$!.25?) it seems unlikely to be a simple arbitrage scheme. All the talk about fracking never really changed the overall US energy picture, but it did drive a lot of finance activity. The current oil price collapse has very little to do with supply and demand for actual oil, but rather supply and demand for paper oil.
So what the hell are these grifters up to? They don't do anything for absolutely no reason, though the true reasons often don't become apparent for a long time.
Are they planning to build export facilities (which really don't exist right now) to allow us to supply Europe after we pay mercenaries to destroy Russian pipelines through Ukraine and the Baltic Sea? Or perhaps the US has decided the House of Saud is over and done with, and Saudi oil production is going to crash, so we might as well make Saudi Arabia the next dumpster fire in Zbigniew Brzezinski's nihilistic game of death--oops, I mean "Grand Chessboard" strategy?
Whatever else the US is planning, we're not planning to become a net exporter of oil because that would require cutting our own consumptioin by over half. The only way this makes any sense at all is if we're going to import even more from Canada, Venezuela, Mexico etc. than we already do, then middle-man it to Europe after we've cut off their other supplies of energy. Our ISIS/Libya gambit has severely threatened the easy flow of oil north to Italy and the E.U., and in combination with Boko Haram is blocking possible pipelines from Nigeria northward. Funny how these Sunnis extremists pop up right where our rivals to Empire, Russia, China and the E.U., would like to have pipelines. See Afghanistan, Iraq, Syria, Darfur, et. al. for other examples.
Is this what we're up to? Setting the stage to choke out the E.U. when we feel the time is right? Because as a straight-up trade deal, it doesn't make any sense at all.
Our all-of-the-above energy strategy aims to harness American innovation and develop a diverse portfolio of American-made energy. We are safely and responsibly developing our energy resources while advancing cleaner forms of energy, such as natural gas and renewables. In November 2013, America hit a milestone of energy independence: For the first time in nearly two decades, the U.S. produced more oil domestically than it imported from foreign sources. And the U.S. is now the number-one natural gas producer in the world.
Thanks in part to these initiatives, America’s dependence on foreign oil is at a 40-year low — and declining. As we decrease our carbon emissions, our economy continues to grow. Our all-of-the-above approach is advancing our energy independence, supporting American jobs, and building the foundation for a clean-energy economy.
Our all-of-the-above energy strategy aims to harness American innovation and develop a diverse portfolio of American-made energy. We are safely and responsibly developing our energy resources while advancing cleaner forms of energy, such as natural gas and renewables. In November 2013, America hit a milestone of energy independence: For the first time in nearly two decades, the U.S. produced more oil domestically than it imported from foreign sources. And the U.S. is now the number-one natural gas producer in the world.
Thanks in part to these initiatives, America’s dependence on foreign oil is at a 40-year low — and declining. As we decrease our carbon emissions, our economy continues to grow. Our all-of-the-above approach is advancing our energy independence, supporting American jobs, and building the foundation for a clean-energy economy.
Don't Count on an Oil Rally If U.S. Crude Export Ban Is Lifted
14 December 2015, by Dan Murtaugh (Bloomberg)
http://www.bloomberg.com/news/articles/2015-12-14/don-t-count-on-an-oil-...
OPEC Sees Zero Impact on Oil Market From U.S. Lifting Export Ban
15 December 2015, by Debjit Chakraborty and Pratik Parija (Bloomberg)
http://www.bloomberg.com/news/articles/2015-12-15/opec-sees-zero-impact-...
Everything they do is to screw the American people, and/or those who live and play in the USA. Fucking treasonous, thieving bastards!
All this does is create more tanker traffic as oil criss crosses the world oceans. The US currently imports about 7million barrels /day to make up its shotfall. Does this mean they can resell imported oil at a profit.Market economy gone mad.Send your oil to Asia but buy yours from the Middle East ,Makes a lot of sense ,desn't it?
I am going to be more than pissed off if this results in higher gas prices in the US. Fuck those fucking fuckers.
All new Comcast subscribers will receiver 1 free barrel of oil!