Crude export fight awaits US Congress' return

OREANDA-NEWS. August 27, 2015. The Republican-controlled US Congress is gaining momentum to lift the decades-old restrictions on crude exports but will face a series of tough obstacles to success when it returns from summer recess.

The House of Representatives is likely to act first on crude exports when it returns 8 September. House speaker John Boehner (R-Ohio) last month called for an end to crude export restrictions that Congress first imposed in 1975 in the wake of the Arab oil embargo. The House could vote as early as September to lift the restrictions through a bill that is expected to pass with broad Republican support.

But achieving the same goal in the Senate will require 60 votes to overcome a filibuster, meaning Republicans need the support of at least six Democrats. Senators Joe Manchin (D-West Virginia) and Heidi Heitkamp (D-North Dakota) support lifting the export restrictions, but energy experts say finding the four remaining votes will be more challenging.

"To get those six Democrats on an overall bill you're going to need to have some Democratic priorities baked in," said Berkeley Research Group energy and natural resources associate director James Koehler.

Senate minority leader Harry Reid (D-Nevada) this month began floating the possibility of reaching a "compromise" to allow crude exports, a deal that many expect would include an extension of federal tax credits for wind and solar energy.

But getting Republicans to vote for renewable energy tax credits would be a tough sell heading into the 2016 election year, particularly with four Senate Republicans running to be president. Among the political dangers for Republicans is appearing supportive of President Barack Obama's effort to regulate power sector CO? emissions.

"Republicans that took that deal would have to be furiously drunk," Republican strategist and energy lobbyist Michael McKenna said. "For Republicans to be in favor of these is essentially being in favor of the President's carbon rule."

Another obstacle to lifting crude export restrictions are independent US refiners, who are able to buy US crude at a discount to the global benchmark because of the export restrictions. Those refiners argue lifting the restriction would cause US gasoline prices to rise. Though oil producers argue the opposite would happen, taking action on crude exports carries the political risk of taking the blame for higher prices.

"It is not that hard to write some pretty hard-hitting campaign ads on this," said Crude Coalition executive director Jay Hauck, who represents independent refiners such as Monroe Energy and Alon USA that have been fighting to retain the crude export restrictions.

Another potential obstacle is the Senate's packed legislative calendar. The Iran nuclear deal, spending bills, a highway bill and debt limit fight will likely dominate the Senate agenda after lawmakers return from summer recess on 8 September.

Even with these challenges, oil producers are optimistic Congress will lift the crude export restrictions by the end of the year. Producers for American Crude Oil Exports executive director George Baker, which has been lobbying to lift the export restrictions, said the Senate's busy schedule might even offer a benefit: providing a vehicle for crude export legislation.

"There could be any number of opportunities. That is why we are optimistic," he said.