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Oil Industry Gaining Ground In Washington To End Export Ban

Congress is getting closer to voting on ending the 40-year-old ban on exporting U.S. crude oil, but even if the measure passes, it’s not clear whether President Obama will sign it or veto it.

In September, House Majority Leader Kevin McCarthy, Republican of California, promised to allow a vote on a measure drawn up by Rep. Joe Barton, a Texas Republican, that would allow unlimited exports. Similar legislation, jointly written by Republican Lisa Murkowski of Alaska and Democrat Heidi Heitkamp of North Dakota, is under consideration in the Senate.

Many other Democrats, including Obama, oppose such legislation, saying it’s unnecessary because the Commerce Department is already empowered to approve occasional exceptions to the ban. Nevertheless, supporters say they are willing to accept a compromise acceptable to both sides.

Related: Six Reasons Natural Gas Prices Are Staying Down

For example, on Oct. 1, the Senate Banking Committee approved the Murkowski-Heitkamp bill, despite nay votes from virtually all Democrats on the panel. Yet some of these opponents said they hadn’t ruled out some form of legislation that would allow a resumption of exports.

One was Democratic Sen. Jon Tester of Montana. He said his state could benefit financially from an end to the ban if the bill included language on energy conservation or renewable energy initiatives. “These are all important things,” he said, “and I think if we work together in a bipartisan way – set politics aside – we can do some things that are very positive for the country with this ban.”

That doesn’t mean Democrats will simply accept exports, but even the faintest evidence of bipartisanship in Congress, especially between House Republicans and Senate Democrats, is a sign that the legislation sponsored by Barton, Murkowski and Heitkamp isn’t a pipe dream.

“The sooner this happens, the better for us,” said Kenneth Cohen, Exxon Mobil’s vice president for public and governmental affairs. “The momentum has picked up. The political calculus right now is very favorable for taking a look and actually doing something about this ban.”

Related: Is Russia Plotting To Bring Down OPEC?

One reason such legislation is progressing in Congress is the U.S. oil industry’s huge lobbying effort in Washington. They argue that resuming exports will lead to more jobs in the industry and ancillary businesses, and will lead to increased domestic oil production, thereby driving down the cost consumers pay for fuel.

The industry has given generously to think tanks and similar organizations to issue reports and news commentaries supporting an end to the ban, and has paid for television ads identifying House Democrats who may be persuaded to shift from opponents of the legislation to supporters.

For example, Producers for American Crude Oil Exports (PACE) has bought television ads shown on cable news networks and during sports events in nine states, including California, Florida and Texas, calling on citizens to urge their representatives to vote for Barton’s bill.

Related: What Will Happen To Oil Prices When China Fills Its SPR?

A lifting of the ban is opposed by the CRUDE Coalition, an alliance of oil refineries, and the United Steelworkers Union, which represents refinery employees. Both argue that resuming unlimited exports would mean less work for domestic refineries, thereby reducing the number of U.S. jobs and leading to increased worldwide air pollution from foreign refineries.

The ban on crude exports was imposed in 1975 in response to the Arab oil embargo that withheld most Middle Eastern oil from the United States because of Washington’s support of Israel during the 1973 Yom Kippur War. The measure had only a few exemptions, such as permitting exports to Canada.

In the past few years, however, increased U.S. oil production, mostly from shale fields, has made American a major player in the oil markets once again and even contributed to the current oil glut, which has caused oil prices to plummet since the summer of 2014.

By Andy Tully of Oilprice.com

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