Recently the House passed a bill that would lift restrictions on crude oil exports from the U.S. The measure is on its way to the Senate where analysts say it faces a tough battle — a battle that may not even win the ultimate war as President Barack Obama has promised to veto the bill.
These 40-year-old restrictions were put into place when there was a national push for energy independence from foreign oil. Of course, this was before the massive fracking boom of the past few years and before our current crude supply glut.
As measures to lift the ban now move through legislative circles, opinions about the fallout from a repeal remain bitterly divided.
Here’s a look at what some of the potential fallout from allowing crude producers to sell overseas could be.
It Could Help Foreign Policy:
An influx of crude from the U.S. would diversify the world oil market – which means countries in Europe could rely less on oil and gas from Russia, Venezuela and the Middle East. Basically, America’s allies wouldn’t be as threatened by the consequence of losing their energy supply if they went against other key exporters in global disputes.
As one analyst at Reuters pointed out, other countries also wouldn’t be able to use America’s restrictions on energy markets to justify their own undesirable behavior. For example, having this ban makes it hard for the U.S. to criticize China for currency manipulation while keeping energy market protectionist policies in place.
Refiners Would Take a Huge Hit:
U.S. refiners are generally equipped to handle heavy, sulphur-laden oil. But fracking in the U.S. has dug up light, sweet crude. While refiners have updated to process this type of oil, they haven’t kept up completely with the overabundance flowing from the shale boom.
Refiners have benefited from cheaper natural gas – which they use as a feedstock and fuel – but the industry’s lobbying efforts have nevertheless amassed to take on big oil and fight for the ban.
The most recent analysis from the Energy Information Administration supports the idea that keeping the ban is a better bet for refiners – if gone, the industry will face an estimated $22.7 billion in losses by 2025.
Those losses, however, would be offset by gains to the overall oil economy. According to the EIA, U.S. oil producers could bring in an additional $29 billion. Meanwhile, the Aspen Institute estimated that it could add 630,000 jobs by 2019.
It Could (Sort of) be Good For Environment:
No, really. Here’s why: Currently the political climate has pitted Republicans (on the side of the oil industry) against Democrats (often on the side of refiners). To get the kind of bipartisan support this measure would need to pass through Congress and then be signed by President Obama, some are calling for increased tax credits to the renewable energy sector including wind and solar.
Heidi Heitkamp (D-N.D.), has taken this angle in the Senate by working to appeal to other Democrats with talk of including expiring tax credits for renewables – a current goal for Democrats. While it’s unsurprising Heitkamp supports lifting the ban since she represents one of the country’s biggest oil-producing states, if her efforts are successful, lifting the ban could simultaneously help big oil and renewables in the U.S.
But many Democrats remain strongly opposed to any increase in fossil fuel activity and an important question remains: Even if there was growth in the renewables sector spurred by tax breaks, would it be enough to outweigh the potential additional environmental damage of revved up oil drilling?