House Majority Leader expected to announce vote today
Oil companies have been pushing hard in the last year to see the end of a four-decade-old ban on the export of U.S. crude oil. “The growing supply of American oil is outpacing domestic demand and needs a new outlet,” said Fred Upton (R-MI), Chairman of the Energy & Commerce Committee in the U.S. House of Representatives, in an opening statement for a bill to lift the ban.
Today, House Majority Leader Kevin McCarthy (R-CA) is expected to announce a bill in the House to lift export ban while giving a speech in Houston. The vote is planned for the last week of September, reports The Wall Street Journal, which obtained a copy of McCarthy’s speech ahead of the event.
“If there was ever a time to lift the oil export ban, it’s now,” McCarthy plans to say during his speech. “Lifting the oil export ban will not only help our economy, it will also bolster our geopolitical standing.”
The bill will likely pass the GOP-controlled House, but bills to lift the export ban have met resistance in the Senate, where there is concern that lifting the ban could raise the price of gasoline. Several studies have found that this would not likely happen, and in fact, lifting the ban could potentially lower U.S. gasoline prices studies have indicated.
Studies conducted by the Energy Information Administration (EIA), Brookings Institute and Rice University have all indicated that U.S. gasoline prices are linked to Brent crude pricing, rather than the U.S. benchmark WTI. The EIA’s research found that the additional American supply would narrow the spot price spread by pulling Brent prices down, lowering the cost of gasoline inside the United States.
The U.S. is loosening sanctions
In August of this year, it was announced that the U.S. would start to export light crude oil to Mexico as part of a crude oil swap. Petroleos Mexicanos SA (Pemex) asked Washington for permission to start bringing up to 100 MBOPD of U.S. oil into Mexico at the beginning of the year. The deal was approved without the need of the Congressional approval by the U.S. Commerce Department as crude swaps do not technically constitute exports.
The head of Pemex’s commercial arm, Jose Manuel Carrera, said the decision is a big step in the direction of creating a North American energy bloc. “Once both countries have this experience and see the benefits, it will create a deeper understanding of the merits, and people will feel more comfortable with them,” he said. “This is a small step, but it’s also very significant.”
Countries from Japan and South Korea to Poland have expressed interest in buying American oil, in part so they don’t have to rely on countries like Russia, where politics are making it increasingly difficult to do business. “Other countries quite clearly want to get in on the benefits – geopolitical and economic,” said George Baker, executive director of Producers for American Crude Oil Exports. “They want in on this American oil renaissance for good reasons.”
In an August interview with Oil & Gas 360®, Cheniere Energy’s (ticker: LNG) CEO Charif Souki said: “Today there is no excuse for a ban on exports of crude. … We are already the largest producer of oil on a global basis, and very soon we’re going to be in a position to export oil to the rest of the world, and it doesn’t sit well advocating free markets and market forces and deregulation on a global basis if we’re going to impose regulations on a domestic basis. So I am absolutely convinced that it’s just a matter of time until the ban is repealed and we’ll be able to export oil.”