December 2015 saw the passing of legislation that will lift the ban on U.S. crude exports in place since 1975. The Republicans succeeded in pushing through the lift of the 40-year-old ban although such a move seemed unlikely just a couple of months prior. According to the Financial Times, President Barack Obama’s administration, although opposed to the move, is expected to accept a broad spending bill that also includes liberalization of oil sales.
The crude export ban of 1975
Introduced as a response to the oil crisis of 1973-74, and signed into law as the Energy Policy and Conservation Act on December 22, 1975 by President Gerald Ford, the restrictions on export were seen as necessary to protect American interests as a major importer of fuel. Although the legislation is referred to as a “ban” it did allow for certain exceptions such as exports of crude oil to Canada, as long as the oil was used there and not sold on, exports of Alaskan oil using the Trans-Alaskan pipeline, and small amounts of specific heavy Californian crude oil. The overall policy aimed to discourage exports of crude while allowing shipments of refined products to reach 1.7 million barrels per day in 2012.
Removing the long-standing ban on exports was something that has long divided opinions in the United States. E&P companies called for easing of the restrictions, which would allow them to seek better prices abroad with domestic oil prices hitting all-time lows.
The full article, along with all maps and graphs, is available in Issue 2 of Shale Gas International Magazine and can be found on page 25.