The 40-year-old ban on exporting most domestic crude oil will likely be repealed by Congress in early 2016, investment advisor Evercore ISI said Friday.
"We remain of the view that energy policy reform legislation, including repeal of the U.S. oil export ban, is 60 percent likely to become law by the end of the first quarter of 2016," Evercore analyst Terry Haines wrote in a research note Friday, reported Splash 24/7. "The Obama Administration has expressed a view that the ban should change without yet addressing specifics, and also has taken many liberalizing actions, from condensate export approval to authorizing trade of Mexican heavy oil for US light crude and approving Shell to drill for oil and gas in Alaska's Chukchi Sea."
The oil export ban was implemented by Congress in the 1970s in an effort to preserve U.S. oil reserves, but now that oil production in the U.S. has increased, lawmakers and oil companies are reconsidering moving into foreign markets.
Haines said the move to end the ban would likely include conditions allowing the Obama administration to set export levels.
"We think the form of repeal legislation is likely to combine repealing the ban with providing regulators the ability to set export targets: this is the only compromise that is likely to be workable from both public policy and bipartisan political perspectives," Haines said.
He added: "That sort of repeal also would be attractive to congressional Republicans and Democrats that would see it as a compromise alternative that overturns the ban and is a significant step on the road to full unregulated repeal," reported Bloomberg.
In December 2014, the Obama administration took two initial steps to end the ban on exports. The Bureau of Industry and Security, which regulates export controls, gave permission to "some" companies to sell lightly treated condensate, reported Reuters. The bureau also released guidance to explain what type of oil was allowed under the ban. Earlier this month, the U.S. allowed light crude and condensate to be traded for heavy Mexican crude. Canada is the only other country exempt from the ban on exports, Bloomberg said.
A report released Friday by the Center for American Progress warned of the environmental costs associated with allowing more oil exports.
"A hasty decision to outsource U.S. refinery capacity might boost oil company profits, but it would also carry a high environmental price tag and create uncertainty for consumers," report co-author Matt Lee-Ashley said in a statement, reported Think Progress. "Congress should carefully weigh the full costs and risks of outsourcing American oil."
The report says lifting the ban could increase U.S. oil production by 3.3 million barrels a day and result in a large amount of land being lost to oil developers - about 137 square miles of land each year. Burning that oil would release more than 515 million metric tons of carbon pollution into the atmosphere, roughly the same as adding 108 million passenger cars to the road or operating 135 additional coal-fired power plants, according to the report.
"The environmental impacts of increasing U.S. oil exports can affect the global environment, as well," the report said. "Outsourcing U.S. refining capacity to countries with weaker environmental safeguards, for example, could result in additional air and water pollution in those countries and globally. In addition, if increased U.S. crude oil exports indeed lower international oil prices, as oil producers argue, these lower prices would disincentivize or slow the transition to cleaner and renewable fuel supplies around the world."
