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The US Is About to Export Oil for the First Time in 40 Years

A budget deal just brokered in Congress includes lifting a ban on crude oil exports, which has been in place since 1975, in exchange for an extension of renewable energy tax credits.
Photo by Lucy Nicholson/Reuters

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Congress has greased the skids for US oil producers to be able to sell American crude on world markets for the first time since the Captain and Tennille topped the Billboard charts.

A late-night budget deal would end the 1975 ban on US oil exports, a top priority for the slumping oil industry, while keeping federal tax breaks for wind, solar, and other renewable energy sources alive for another five years. The issue had held up a $1.1 trillion bill to fund the federal government through 2016 as the Senate's Democratic minority extracted a price for lifting the ban.

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"No legislation is perfect, but this is good legislation," Senate Minority Leader Harry Reid, D-Nevada, said Wednesday.

Environmentalists strongly opposed lifting the ban, arguing it would spur the burning of more fossil fuels and worsen climate change just as the world reached a deal to rein in planet-warming carbon emissions.

"Lifting the ban on crude oil exports would undercut all the other progress our nation may make in fighting climate change," Kassie Siegel, senior counsel for the Center for Biological Diversity's Climate Law Institute, said in a written statement. "It would increase planet-warming pollution and deliver more fracking and dangerous drilling in America's vulnerable communities and precious wildlife habitat."

The liberal Center for American Progress estimated that lifting the export ban could produce additional emissions comparable to 108 million cars. But Reid said extending wind and solar energy subsidies "will eliminate over 10 times the carbon emissions that lifting the oil-export ban will create," while creating new American jobs.

Related: Nations Agree to Historic Pact on Climate Change

Rhone Resch, president and CEO of the Solar Energy Industries Association, said the tax breaks for renewable energy are likely to mean another 140,000 jobs for his field.

"These jobs are stable, well-paying and cannot be exported overseas," Resch said in a written statement.

House Speaker Paul Ryan, R-Wisconsin, said the package is likely to be voted on Friday.

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The export ban dates back to the 1970s, when Arab oil producers slapped an embargo on the United States over its support for Israel in the 1973 Mideast war. The resulting gas lines highlighted a new vulnerability, and the administration of President Gerald Ford and Congress responded by keeping American oil on American markets. But the shale boom that has made the United States the world's top petroleum producer again has left oil companies looking for new markets to sell what they pump.

The American Petroleum Institute, the leading oil industry trade association, estimates that allowing American crude to be sold overseas would result in an increase in production of about 500,000 barrels a day. The US Energy Information Administration estimates oil producers could make as much nearly $30 billion over the next decade if the ban is lifted, with little or no effect on US consumers.

But world markets are now awash in oil, with prices plunging from more than $100 a barrel to less than $40 over the past two years — and experts say lifting the ban isn't likely to do much to help US producers until those prices recover.

In a letter to congressional leaders supporting the bill, the API said exporting oil would benefit US consumers and help American allies, "who are eager to reduce their reliance on less friendly nations."

"We are in the midst of an energy renaissance in which America has an abundance of energy," the industry group wrote. "Lifting the ban on U.S. crude oil exports will benefit American consumers and workers, and our allies across the globe."

Related: Congress Wants to Give Oil Markets Exactly What They Don't Need — More Oil

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