Congress Approves Export of US Crude Oil

by | Jan 12, 2016

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dehart-juneOn December 18, President Obama signed into law HR 2029, the Consolidated Appropriations Act of 2016, the so-called Omnibus Appropriations bill. This $1.15 trillion measure funded the Federal Government through FY 2016. Included in this seemingly unrelated Omnibus package were provisions that ended the 40-year prohibition on the export of crude oil produced in the United States. When I wrote about this topic for this publication a year ago, it was clear that it would be one of the pressing issues of the 2015 Congressional session. At the time, the outcome was uncertain, but what was certain was that timing before the 2016 election year would be a key driver for proponents.

As the first session of the 114th Congress began in 2015, Congressman Joe Barton (R-TX) reintroduced his bill and Senator Lisa Murkowski (R-AK) began hearings and introduced her own legislation, both calling on Congress to unleash the restrictions on the industry. Though the House passed the Barton bill, and the Murkowski and Senator Heidi Heitkamp (D-ND) bills to lift the ban were reported from the Energy and Banking Committees, respectively, and several attempts were made to offer amendments on the Senate floor, the Senate never considered the Barton, Murkowski or Heitkamp bills as stand-alone legislation on the floor of the Senate in the face of strong opposition from Democrats. Even some vulnerable Republicans up for reelection in 2016 were leery of voting to lift the ban in fear of retribution from voters if gasoline prices were to rise from new lows.

Lifting the ban on crude exports was destined for the Omnibus bill given the politics. Proponents of lifting the ban had natural allies in most Republicans who historically supported the oil industry. Though Republicans were concerned that some refiners were opposed to lifting the ban because of the adverse impact of higher crude prices on refinery operations, investment and refinery jobs, in the end they came down on the side of increased US production and the estimated one million jobs it could create. They also believed a win for the oil industry would buoy the 2016 campaign for the Congress and the White House, but feared it could never be accomplished in the 2016 election year.

While House Republicans easily passed the Barton bill, it was no sure thing in the Senate, where 60 votes are needed to invoke cloture. So Senate Republicans focused on winning Democrat votes. But getting to 60 votes in the Senate proved too difficult. Opponents of lifting the ban had natural allies in Democrats. While a group of small refiners successfully led the opposition to exports for most of the year, environmental, labor and consumer groups joined in lobbying Senate Democrats, focusing on the environmental impacts of increased fossil fuel production, the potential loss of unionized refinery jobs, and the possible increases in consumer fuel prices. With Republicans determined to lift the ban and most Democrats strongly opposed, moderate Democrats and Democrats from oil-producing states saw an opportunity to forge a “grand bargain,” one that would achieve Democrat goals for renewables in exchange for agreement to lift the ban. It could happen only in the year-end Omnibus bill and the complex give-and-take in crafting the bill. The White House signaled that it wouldn’t veto such a bargain.

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