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House Votes to Lift Oil Export Ban

by Elizabeth Alford on October 14, 2015

The U.S. House of Representatives passed a bill last week that will voted to lift the 40-year-old Federal crude oil export ban. 

Related: Oil Export Ban May Hurt Economy | Bakken Shale

House Bill 702 “prohibits any federal official from imposing or enforcing any restriction on the export of crude oil.” The bill passed with a 261-159, which isn’t enough overturn a presidential veto

Henry Cuellar, co-sponsor of the bill, said the vote is a strong step toward a more prosperous U.S. energy sector.

Cuellar commented that “Lifting the ban will create hundreds of thousands of jobs, increase GDP by $134 billion and raise government revenues by $29 billion. The ban harms national security by preventing the U.S. from fully utilizing all the tools in our arsenal, while at the same time allowing Russia and Iran to claim an outsize market share among our allies.

In a recent  policy statement the Obama administration threatened to veto the bill, saying that “Legislation to remove crude export restrictions is not needed at this time. Rather, Congress should be focusing its efforts on supporting our transition to a low-carbon economy.”

The export ban on all petroleum products was imposed during the 1970s as a way for the government to control prices during a time of scarcity. But times have changed and since 2008, U.S. crude oil output has increase by 81% and many believe that keeping this law on the books is hurting the economy.

Mineral owners may be the biggest losers as long as the ban remains in effect. The oil market is one of the most liquid and free moving markets in the world, but we don’t export crude. The bottom line is a ban on oil exports is a deduction straight from the bottom line of your royalty checks. If the current oil boom in the shale plays continues, your royalties will remain artificially low until the export ban is lifted.

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