The U.S. is poised to lift a 40-year ban on exporting oil.
Lawmakers are close to authorizing oil exports as part of a broader $1.1 trillion spending and tax bill working its way through Congress. Sources told CNN the compromise measure, which is needed to avert a government shutdown, includes a provision that would roll back the export restriction.
The oil export ban was signed into law in 1975, part of the reaction to an OPEC embargo that created a shortage of crude and slammed the American economy with skyrocketing prices.
Today, the world has too much oil — thanks in part to America’s shale oil boom. Crude oil prices crashed below $35 a barrel, and a gallon of gasoline is on the verge of falling below $2 per gallon.
In other words, there is no longer an oil scarcity that justifies keeping it at home.
“Restrictions on free trade of energy are a legacy of a bygone era that doesn’t reflect the realities of today,” said Jason Bordoff, a former energy adviser to President Obama who testified on Capitol Hill about the issue.
Lifting the oil export ban could encourage more domestic output in the long term as prices rebound from their recent lows. Increased U.S. oil activity should also help save some jobs in the energy industry.
The dramatic drop in oil prices has left the the energy and mining industry reeling from over 100,000 job cuts in the past year.
“This is a bit of a lifeline for U.S. producers,” said Joe McMonigle, who served as chief of staff of the Energy Department under former President George W. Bush.
Not everyone in the energy industry supports lifting the export ban.
U.S. refiners want to keep it in place because they’ve benefited from being able to buy oil at the cheaper domestic price and then sell it at the higher global price.
The U.S. Energy Information Administration has analyzed the outcome and expects that refiners would cut jobs and suffer a loss of $22 billion in annual profits by 2025 if the ban is lifted.
Some lawmakers are looking to ease anger from refiners by offering tax credits to the industry, especially in the Northeast.