The U.S. Congress voted on Friday to repeal the 40-year-old ban on exporting U.S. crude oil in an energy policy shift sought by Republicans as part of a bipartisan deal that also provided unprecedented tax incentives for wind and solar power.
The Senate, on a 65-33 vote, approved lifting the ban and providing five-year extensions of tax breaks to boost renewable energy development as part of a $1.8 trillion government spending and tax relief bill that President Barack Obama quickly signed into law.
The House of Representatives passed legislation containing the energy provisions earlier in the day by a 316-113 tally.The energy deal was hammered out in secret talks among congressional leaders over two weeks.
Drillers said continuing the ban would choke a boom in shale oil production since 2008 particularly in North Dakota and Texas that has pushed domestic oil prices down from more than $100 a barrel to below $40. Lifting the ban was “particularly important at a time when our industry is experiencing a period of extreme volatility and uncertainty,” Ryan Lance, chairman and CEO of ConocoPhillips, said in a statement.
House Democratic leader Nancy Pelosi and some others in her party had expressed concern that allowing U.S. oil exports would hurt independent refiners by raising the price of domestic crude to international prices.
Tom O’Malley, executive chairman of refiner PBF Energy (PBF.N), said lifting the ban would lead at least one East Coast refinery to shut down, adding that his refineries in New Jersey and Delaware are less exposed.
“This is a crazy thing to do,” O’Malley said. “Once you lift it, it’s hard to reverse it.”Democrats in the Senate had secured some protections for independent refiners, allowing them to deduct transportation costs for gasoline and other fuels they make. Pelosi on Friday said Democrats walked away with a victory, in the trade of oil exports for environmental goals.
She said the environmental damage from exporting oil would be offset by 10 times because of measures in the bill such as the renewable power tax credits, funding of a parks conservation fund paid for with oil revenues and the elimination of measures that would have dismantled Obama’s clean power rules on power plants.
“Now that we have leveled the playing field, the United States finally has an opportunity to compete and realize our nation’s full potential as a global energy superpower,” said George Baker, head of Producers for American Crude Oil Exports, a group that formed last year to press lawmakers to open the trade.