One big win from Congress’ year-end spending and tax bill was lifting the oil export ban that’s been in place since Gerald Ford was president.
Congress earned plenty of praise.
The Wall Street Journal editorial page:
Allowing the U.S. industry to sell into the world market is a lifeline that will mitigate the domestic glut, and it may save numerous companies and thousands of jobs from bankruptcy.
The USA Today editorial board:
It's about time.
The ban, imposed in response to the Arab oil embargoes of the 1970s, has long since outlived any usefulness it might have once had. More recently, it has done palpable harm to domestic producers.
Karen Harbert, president and CEO of the U.S Chamber’s Institute for 21st Century Energy:
By voting to lift the ban on oil exports, Congress has made it possible to unleash American energy around the world
So, should we expect massive amounts of American oil being loaded into supertankers right way?
No. In the short-term, low global oil prices will be the dominant factor.
“I wouldn’t expect to see anything dramatic immediately,” Christopher Guith, vice president at the Institute for 21st Century Energy told The Greeley Tribune. “At $35, $36, $37 a barrel, there’s not anywhere near as much arbitrage and moving crude around the world as there is when say it’s $110 a barrel.”
For now, U.S. producers are weathering the low-price storm by drilling wells and pumping oil more efficiently. Rig counts have gone down, but output per rig has increased.
Low oil prices won’t last forever. OPEC members might give up maintaining market share and cut back production, or international economic growth will accelerate, driving up oil demand.
In either case, once oil prices rise, U.S. companies will be able to take advantage of higher prices by selling to global markets.
“We have so much oil that when prices rise, production will grow and we’ll be able to export more of it,” said Scott Sheffield, Pioneer Natural Resources’ CEO, in a Wall Street Journal interview.
For the moment, ending the ban is still helpful, because pockets of buyers and sellers will be able to come together, Guith said:
There are anecdotal instances where there is supply and a buyer across a border, or across several borders, where that deal has not been able to be done. Now that can happen. I think we’ll see that a lot in south Texas and there are significant producers in the [Denver-Julesburg] Basin that also produce down there. Them doing good anywhere is good for folks in northern Colorado.
Over the long-term, ending the export ban will be good for American jobs and the economy. Bernard Weinstein, an economist at Southern Methodist University’s Maguire Energy Institute, told The Greeley Tribune, “I believe in the long-term, because of our advantages, particularly in the Gulf of Mexico and in the shale plays, we should be able to capture some percentage of the global market.”
Research has found that ending the ban will create as many as 859,000 jobs annually and add as much as $1.8 trillion to the economy.