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(Bloomberg) — The U.S. is poised to reverse an energy policy that has helped define its relations with the world for more than a generation after congressional leaders agreed to lift the nation’s 40-year-old restrictions on crude-oil exports.
The House and Senate on Tuesday evening reached a deal on tax and spending plans that included an end to the oil-trade limits, according to Representative Reid Ribble, a Wisconsin Republican , and Representative Joe Barton, a Republican from Texas, who spoke after a meeting with fellow party members.
The deal has been brokered to help smooth its passage through Congress, which may vote as soon as Thursday. While President Barack Obama is opposed to lifting the ban, the White House has stopped short of threatening to veto the provision as part of the wider spending bill.
“It puts the United States in the driver’s seat of energy policy worldwide,” Barton said. The change — still subject to Senate and House approval — “is a huge victory,” he said.
Limits on U.S. oil exports would be lifted immediately, according to the bill released early Wednesday by the House Appropriations Committee. It would allow the president to impose restrictions on exports for national-security reasons and in case of a shortage.
The tax measure would extend a $1 per gallon biodiesel tax credit for fuel blenders and tax credits for renewable energy sources — provisions sought by Democrats in exchange for lifting the oil export ban.
Wind developers would get at least five more years to claim a production tax credit that helps finance those projects, with the amount of that credit gradually scaling down.
Commercial and residential solar developers also would be able to claim an investment tax credit for at least five more years under the government-wide spending package, though it would gradually phase down from covering 30 percent of qualifying costs today to 10 percent.
“By extending the solar investment tax credit for five years with a commence construction provision and a gradual ramp down, bipartisan members in both Houses have reestablished America as the global leader in clean energy, which will boost our economy and create thousands of jobs across America,” said Rhone Resch, president of the Solar Energy Industries Association in an e-mailed statement.
The 50-year-old Land and Water Conservation Fund, which expired in September, would get a three-year re-authorization, under the legislation. The fund is the principal source of money for land acquisition by four federal agencies; it also provides matching grants to help states build outdoor facilities and buy new lands and waters for recreation.
Conservationists, sportsmen, hunters and hikers cast the temporary extension as a modest win, falling short of the permanent extension and full funding they have been seeking.
Land Tawney, executive director of Backcountry Hunters and Anglers, said in an e-mailed statement that the group is “disappointed by the limited scope of this measure.”
If Congress approves the deal in the coming days — and President Obama adds his signature — it would end trade limits established to counter the energy-supply shortages of the 1970s.
“We have the best technology, the best oil and over time we will drive out Russian oil we will drive out Saudi, Iranian” Barton said.
What happens next will determine whether the U.S., now one of the world’s largest oil and gas producers, will join other nations in allowing unfettered access to its crude.
Some refiners, such as PBF Energy Inc. of Parsippany, New Jersey, and Monroe Energy LLC, the Philadelphia-area unit of Delta Air Lines Inc., have said they may be harmed by repeal of the trade restrictions. Producers including ConocoPhillips and Continental Resources Inc. have lobbied for it, as the industry has slashed more than 100,000 jobs to cope with a global oil glut and the lowest prices in six years.
West Texas Intermediate crude for January delivery declined as much as 62 cents to $36.73 a barrel on the New York Mercantile Exchange and was at $36.77 at 4:20 p.m. in Singapore. The U.S. benchmark slid below $35 a barrel Monday for the first time since February 2009. The gap between WTI and Brent — the North Sea grade used globally – was at 99 cents after closing Tuesday at $1.10, the narrowest since January.
Brent for January settlement, which expires Wednesday, slid 58 cents to $37.87 a barrel on the London-based ICE Futures Europe exchange. The more-active February contract decreased 57 cents to $38.16.
Repeal may not immediately provide a jolt of U.S. crude exports, due to the relatively small discount of American crude blends, including WTI, to international prices. Transportation costs may make it too expensive to ship oil to Europe, a possible destination for U.S. exports, according to Michael Levi, senior fellow for energy and environment at the Council on Foreign Relations.
“There is currently little if any incentive for U.S. oil producers to export crude oil even if the ban is lifted, ” he said on the council’s blog.
The U.S. already permits some crude shipments overseas, primarily to Canada. The U.S. exported about 500,000 barrels a day in October, a 22 percent increase from September, according to the latest information from the Commerce Department’s Census Bureau.
–With assistance from Billy House, James Rowley, Heesu Lee and Erik Wasson.
©2015 Bloomberg News
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