With a negative oil price forecast and threats of Chinese economic collapse weighing heavily on global markets, the U.S. Congress is facing more than just another routine debate on lifting oil exports when it meets on September 8th.
The U.S. Energy Information Administration(EIA) has voiced its approval for lifting the ban, but deadlines are tight. (Source: EIA, last accessed September 4, 2015.)
It is expected that once lawmakers convene on Capitol Hill, they will have only three months to work through the complexities of getting the ban on U.S. crude oil removed.
With an election year looming large, supporters of a liberalized oil export regime have been putting more and more pressure on lawmakers to pass the bill as soon as possible.
What is likely to happen, though?
While the outcome is still unknown, there are three main things to consider.
1) How exactly would Congress go about repealing the U.S. crude oil export ban?
Various bills have been introduced, including bill HR 702 by Texas Republican Representative Joe Barton. While the bill introduced last February enjoys the necessary support, Fred Upton, Chairman of the House Energy and Commerce Committee and Representative, responsible for putting it to a House vote, has given less than enthusiastic support. (Source: OilPrice, last accessed September 4, 2015.)
The path towards lifting the crude oil ban is even less clear in the Senate, where a fair amount of political haggling may have to be employed in order to get certain senators on board. (Source: Bloomberg, last accessed September 4, 2015.) The Offshore Production and Energy Natural Security Act, introduced by Alaskan Senator Lisa Murkowski, called for a lift on the ban but had to include concessions such as new lease sales, offshore drilling, and revised revenue-sharing provisions. (Source: The Wall Street Journal, last accessed September 4, 2015.)
These concessions are widely seen as an effort to sweeten the pot for those holdouts that stand to lose something if the ban is lifted.
2) What incentive does the U.S. Congress have to lift the crude oil export ban?
One thing that must be considered is that contentious bills are political poison for those policymakers who want to get things done.
Both Murkowski and Upton are rallying support for their own comprehensive energy bills, subject to full House and Senate voting. (Source: Platts, last accessed September 4, 2015.) The issue of lifting the crude oil ban is still heavily debated, and attaching its terms to an otherwise safe bill is an unadvisable move for a lawmaker looking for an easy win.
Both Upton and Murkowski are pushing their own comprehensive, relatively non-controversial energy bills for full House and Senate votes. While crude exports could be attached to either or both of these bills, lawmakers may be reluctant to push an effort which might sink bills that would otherwise be easy wins.
3) Could the current administration lift the export ban?
While highly unlikely, it could still happen.
Recent moves such as allowing processed condensate exports and crude oil swaps with Mexico have been seen as signals that the Obama administration is relaxing its export policies.
The issue, however, is that those decisions were made in the framework of existing laws and did not require outright policy revisions. Additionally, President Obama’s legacy commitments to climate change make the lifting of an export ban unlikely. The reasoning is that export liberalization has been predicted to increase domestic oil production and influence gas prices. (Source: EIA, last accessed September 4, 2015.)