Washington — Congressional leaders have agreed to include a provision to lift longstanding restrictions on US crude exports in a massive government spending bill, House Republicans said late Tuesday.
¿No está registrado?
Reciba alertas diarias y avisos para suscriptores por correo electrónico; personalice su experiencia.Registro
The provision, which was brokered in an agreement unveiled by House Speaker Paul Ryan at a meeting of Republican House members late Tuesday, is expected to give US oil producers unfettered access to the world market for the first time in 40 years, if the bill is ultimately approved by the House and Senate and signed into law by President Barack Obama.
The crude export provision in the bill was apparently part of a trade-off, which included five-year extensions of solar and wind tax credits that Democrats had been pressing for and a new domestic manufacturing deduction for independent US refiners who are expected to be the most negatively impacted by the proposed change in export policy, according to a source familiar with the deal.
The House and Senate are expected to vote on the bill, known as the omnibus, later this week.
The White House has said President Obama does not support Congress altering the US' crude export policy, stating that any such changes should be made by the administration.
The White House, however, has not explicitly threatened to veto a spending bill with an export provision included and has indicated Obama may sign the bill even if crude exports were included.
"I'm confident that there will be things in the omnibus bill that we do not support," White House Press Secretary Josh Earnest said Tuesday.
In October, the House passed a bill to lift crude export limits by a largely partisan 261-159 vote, but the bill was never taken up by the Senate and drew a veto threat from the White House.
The US Energy Information Administration believes that in most cases a change in US crude export policy will have a minimal effect both on US production and on WTI and Brent prices.
In an extreme, high-production case, however, the Brent-WTI spread could climb as high as $15/b by 2025 if US limits remain in place. If the limits are removed, the spread would climb to only $8.21/b over the next decade under that extreme case, according to the EIA.
An end to US export limits may permanently narrow differentials between WTI and Bakken crude, making east coast and Midcontinent refiners vulnerable to US producers getting unfettered access to the global market, according to Chi Chow, a managing director with Tudor Pickering Holt.
"For East Coast players, narrow Bakken spreads would shut down the vast majority of rail deliveries to the region and movement of Gulf Coast-sourced barrels would become uncompetitive relative to foreign refiners without a concurrent lifting of the Jones Act (which isn't going to happen)," Chow wrote in a note Monday.
"For Midcon refiners, any lifting of the ban would essentially ensure that a blowout of the Brent/WTI differential will likely never occur again."