Big voices in the oil industry and Congress now support a move that would have been unthinkable not long ago: opening the U.S. oil industry to exports.
As The Wall Street Journal reports, the U.S. has long pushed for liberalized trade, with U.S.-produced crude being the biggest exception since the shock of the 1973 Arab oil embargo led Congress to ban oil exports under nearly all circumstances. The only other U.S. products banned under the same regulations are a type of tree found in Western North America called Western red cedar and live horses for slaughter shipped by sea.
The House now looks likely to vote as early as September to lift the oil-export ban, with Senate action anticipated early next year, which would mark a milestone few saw coming.
“Go back seven years, you would not have imagined that there would be a debate about U.S. exporting oil,” says Daniel Yergin, vice chairman of research firm IHS.
But while freely exporting U.S. oil may come as a shock to some Americans, it probably won’t cause much of an economic stir, especially with global oil prices hovering below $50 a barrel.
Thanks to the fracking revolution, the U.S. is no longer the energy-dependent nation it was for most of the past 50 years. Oil production since 2007 has shot up more than 80% to 9.5 million barrels a day. The U.S. still imports a lot of oil, but the share of petroleum from foreign sources, 27%, is at its lowest level since 1985, according to the U.S. Energy Information Administration.
The U.S. is already exporting more than a half-million barrels of crude a day to Canada, the biggest exemption under the ban. That is 14 times as much as in 2007, but still just 5.2% of U.S. oil produced a day.
More than a dozen oil companies, including Continental Resources Inc., ConocoPhillips Co. and Marathon Oil Corp., and several top lawmakers, including Louisiana Republican Sen. Bill Cassidy, Sen. Lisa Murkowski, R-Alaska, and House Speaker John Boehner R-Ohio, contend that allowing unfettered domestic oil exports would eliminate market distortions and streamline U.S. petroleum production. The Obama administration hasn’t taken a public position on the issue.
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