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By Ari Natter
Aug. 6 — House legislation that would end the 40-year ban on the export of domestic crude oil will receive a floor vote this fall, Rep. Joe Barton (R-Texas), the bill’s sponsor, told Bloomberg BNA Aug. 6.
The legislation (H.R. 702), which has 113 co-sponsors, including 13 Democrats, has been gaining momentum as booming domestic oil production and low gas prices have led lawmakers to question the need for the policy enacted in the wake of the Arab oil embargo.
“We’ve got green lights in the House all the way,” Barton said in a phone interview. “The whip, the majority leader, the speaker are all on board to move the bill.”
While House leadership has committed to bring the bill to a vote, Barton said it remains unclear if the bill will move as stand-alone legislation, which he prefers, or as an amendment to broader energy legislation expected to be marked up by the House Energy and Commerce Committee and brought to the floor in September.
“They have committed to support the bill and bring it to a vote,” Barton said of House leadership. “I have every expectation President Obama will sign it.”
The trade prohibition, which applies to most U.S. oil exports but not refined products like gasoline and jet fuel, is opposed by oil producers such as ConocoPhillips Co. and Marathon Oil Corp.
House Speaker John Boehner (R-Ohio) joined a growing chorus of lawmakers calling for it to end, telling reporters in July doing so would be “a big boost to the economy”.
“America is experiencing an energy boom, and our policy needs to follow suit,” he said.
Opponents of changing the law include Consumers and Refiners United for Domestic Energy (CRUDE), a coalition of independent refiners comprising Alon USA, PBF Energy Inc., Philadelphia Energy Solutions and Delta Air Lines Inc.'s Monroe Energy LLC, who argue lifting the ban will increase domestic oil prices.
“This is an enormous political mistake,” Jay Hauck, CRUDE's executive director, told Bloomberg BNA in an e-mail. “The American people do not want to pay more at the pump while their oil gets sent to China. The case for exports is built on myths.”
In addition to repealing the section of the 1975 Energy Policy and Conservation Act that created the crude export ban, the legislation bars the federal government from imposing or enforcing any similar restrictions and requires an Energy Department report on the appropriate size and makeup of the Strategic Petroleum Reserve.
“It’s commonsense,” Barton said of the legislation. “We are the No. 1 oil producer in the world.”
The potential for a U.S. deal with Iran that results in sanctions on the country's oil exports being lifted is among the catalysts leading to increased congressional support for lifting the ban, the research firm Potomac Research Group said in a note to clients.
“In light of the Iran deal, the policy and politics of keeping the US crude export ban in place will be difficult to defend,” the Washington-based firm said. “How can the US government approve lifting a ban on Iranian crude exports, but not a ban on US crude exports?”
Iran has urged fellow OPEC members to make way for it to pump 4 million barrels a day when sanctions are lifted, up from 2.85 million in June, and could boost daily exports by 500,000 barrels, Bloomberg reported.
“It’s almost a sea change in the House side in terms of posture and tone,” Joseph P. McMonigle, a senior energy analyst at Potomac Research Group, told Bloomberg BNA. “For a while there it was just one or two members. But now it looks like both are sort of walking down on the road together.”
Others who are optimistic that Congress will eventually act to lift the ban include Oklahoma City-based oil producer Continental Resources Inc., whose Chief Executive Officer Harold Hamm predicted on an earnings call that Congress would act on the issue this fall.
“We have confidence that he will sign a bill when it gets to his desk,” Hamm said of President Barack Obama.
Barton's legislation is likely to gain enough support in the House to pass but not garner enough votes to override a veto threat, ClearView Energy Partners LLC said in a research note July 30.
Still, the challenge is likely to be more profound in the Senate, where 60 votes are effectively needed for passage.
The research firm estimates Senate support for ending the legislation ranges from 51 votes to 59 votes and estimates the chances of “legislative reforms” to oil export policy in the current Congress as 15 percent.
The Senate Energy and Natural Resources Committee voted along party lines 12-10 to approve legislation (no bill number) backed by Sen. Lisa Murkowski (R-Alaska) that would end the ban and lift restrictions on offshore oil and gas drilling in federal waters, among other policy changes advocated by the oil and gas industry.
But it remains to be seen if Senate Majority Leader Mitch McConnell (R-Ky.) will bring it to the floor amidst a packed agenda.
Speaking to reporters at a forum held by Bloomberg Government, Murkowski said finding floor time for the bill will be tough and that she has yet to decide if she will offer the measure as an amendment to broader energy legislation or pair it with something that promotes renewable energy in an effort to gain additional support.
“I would hope that we’re able to advance it before next year,” she said.
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