United States: Will Congress Repeal The Crude Oil Export Ban In Fall 2015?

Rising congressional support signals real promise that the ban on U.S. crude oil exports could be repealed within the next six months. The U.S. now exports more than 550 thousand barrels per day (kbd) of crude oil and another 120 to 140 kbd of condensate as of May 2015.[1] Yet continuing restrictions mean producers can only access a handful of markets. Meanwhile, U.S. oil refiners are sourcing stranded domestic oil at cut-rate prices, processing it, and then turning around and freely exporting more than 2.5 million bpd of gasoline, diesel, and other refined products at premium global prices.

Low oil prices have emboldened Congress to seriously consider lifting the crude oil export ban. By my count at this time last year, nine lonely members of Congress publicly supported a repeal; now there are at least 150 (128 representatives and 22 senators). Exhibit 1 provides a cumulative summary of congressmen and -women who have publicly endorsed repealing the ban. These numbers will likely rise once representatives and senators return to Washington after the August recess.

Exhibit 1: Crude Oil Exports Are Rapidly Gaining Support in Congress

WTI Spot Price (USD/bbl) and Number of Representatives and Senators Supporting Repeal of Export Ban

Source: Assorted Media Outlets, Draft Bill Texts from House of Representatives and Senate

Isn't there a simpler way to repeal the ban? Yes, but it is not politically feasible at present. President Obama could rescind the ban by executive order and would simply need to show that doing so is in the "national interest." In 1996, President Clinton justified a blanket approval of Alaskan North Slope crude oil exports to Asia on the basis that the export decision was in the national interest and (1) would not "diminish the total quantity or quality of petroleum available to the United States," (2) would not "pose significant risks to the environment," and (3) would not likely "cause sustained material oil supply shortages or sustained oil price increases above world market levels" that would injure consumers in the U.S. and its territories.[2] These three national interest standards could be easily met today, but the administration's political priorities in the energy and environment space likely preclude executive action to lift the ban. Hence the rising support in Congress for legislatively repealing it.

House and Senate advocates of repeal must contend with a mixed map of support that holds promise, but needs significant shoring up in order to amass a veto-proof two-thirds majority (Exhibit 2 and Exhibit 3). On the House side, the 128 supporters to date are clustered in the Rockies and Plains states, as well as Texas, Arizona, Tennessee, and North Carolina.

Exhibit 2: Levels of Support for Repeal of Crude Oil Export Ban in House Delegations, 19 August 2015

California and New York will likely remain bastions of opposition. Likewise for Pennsylvania, home to large independent refiners that benefit from discount-priced U.S. crude supplies stranded by the export ban. These populous states—with 98 House seats between them—will be key "battleground states" where House leaders must try to corral support from at least one-third of each state's delegation. Expect supportive House Democrats such as Henry Cuellar of Texas to push their colleagues hard to try to garner votes in support. Opponents of crude oil exports will likely pressure President Obama to veto any legislation repealing the ban, so getting at least two-thirds support in the House will be an important priority.

On the Senate side, the politics are a bit different. The top oil-producing states, which other than Texas have smaller populations, wield higher influence than they do in the House since all states have two votes regardless of population. At least 22 senators currently support lifting the ban. Thus, if the Senate leadership can persuade the uncommitted senators in the Rocky Mountains, Heartland, and Gulf Coast and a few coastal Democrats to support repealing the ban, they will be well-positioned to pass the legislation. Achieving the two-thirds majority needed to override a presidential veto will be tougher, as Senator Murkowski and her colleagues would need to garner 11 more Democratic votes as well as ensure that all 54 Republican senators support the bill.

Exhibit 3: State-by-State Senate Support for Repealing the Crude Oil Export Ban, 19 August 2015

Many elected representatives' primary point of hesitation when presented with the idea of repealing the crude oil export ban is simple: they fear voters will hold them responsible if gasoline prices increase. This visceral fear endures despite multiple credible studies showing that repealing the U.S. crude oil export ban is in fact much more likely to actually decrease—or at a minimum, stabilize—gasoline prices.[3]

Survey data from the University of Texas Energy Poll covering the period between September 2011 and March 2015 paint an interesting—and somewhat contradictory—picture of how consumers view gasoline price issues.[4] On one hand, respondents consistently attributed the primary responsibility for gasoline prices to oil companies and market forces. Yet of a sample of more than 2,100 people surveyed by the UT Energy Poll before the November 2014 election cycle, 63 percent said they would be more likely to vote for the candidate who "promises to make gasoline less expensive." From data points like these, many politicians are likely to infer that voters will punish them at the ballot box if gasoline prices rise in the wake of legislation to repeal the crude export ban.

Yet crude oil exports do not equal higher gasoline prices. Because gasoline is freely exportable, its price is already set globally regardless of how crude oil exports from the U.S. may or may not be restricted. Restricting exports and trapping surplus light, sweet crude within U.S. borders simply shifts rents to the refining industry.

The "crack spread," which measures refiners' profit margin from processing various crude oils, tells a clear story here. Prior to the shale boom, Brent crude was generally more profitable to process than WTI. Yet beginning in 2011, the profits from refining WTI crude at the U.S. Gulf Coast (and by extension, the shale crudes whose prices closely relate to WTI) rose dramatically relative to the Brent crude crack spread as domestic production increased (Exhibit 4). Refined product exports absorbed the initial wave of shale crude production, but by late 2013, continuing production growth in the shale plays and slower demand growth in key U.S. oil product export markets exacerbated the domestic crude supply glut.

Exhibit 4: U.S. Refiners Profit, Not Oil Producers and Consumers

Refined product and crude oil exports from U.S. (kbd), left axis

Spot WTI 3-2-1 crack spread minus Spot Brent 3-2-1 crack spread, USD/bbl, right axis

Source: EIA, Author's Analysis

Furthermore, despite refiners' access to large amounts of virtually captive shale crude supplies, gasoline prices can still spike and hit consumers' wallets hard. For instance, between August 7 and August 14, 2015, a major refinery outage triggered a more than 50 percent upswing in Chicago-area retail gasoline prices, reaching approximately $3.23 per gallon—a level last seen when WTI crude was selling for twice its current price.[5]

The market case for exports of light, sweet is clear. The U.S. refining system is saturated with the light, low-sulfur shale crudes responsible for virtually all incremental U.S. crude oil supply growth in the past three to four years. Once U.S. refiners' use of domestic crude rose into a consistent 50 percent to 55 percent range, crude oil exports trended sharply upwards, and domestic crude's share of supply only fleetingly exceeded the 55 percent threshold (Exhibit 5). Moreover, there appears to be little room for additional shale barrels in the U.S. refining system. Refiners are running flat out, with capacity utilization rates exceeding 95 percent for the past seven weeks and counting, according to the EIA.

Exhibit 5: Refineries Are Saturated With Domestic Crude, Exports Can Help Rebalance the Market

Source: EIA, Author's Analysis

Refined product exports cannot compensate for the existing glut of shale crudes, not to mention any future production growth. Likewise, new refinery capacity investments for processing light, sweet crudes will likely only make a marginal dent in the current shale crude glut. And if oil prices creep back up and producers become more efficient, even a few hundred thousand additional bpd will swamp expansions and put the market right back in its current state of light, sweet super-saturation.

There is a clear and compelling case for lifting the crude oil export ban and giving U.S. oil producers full access to global markets. Now is the time to harness these arguments and redouble efforts to persuade undecided members of Congress to back a repeal. Based on the rising congressional support analyzed in this article, the odds of the ban being repealed in the next six months are better than 50/50.


[1] "Weekly Imports & Exports," Energy Information Administration (Petroleum and Other Liquids), http://www.eia.gov/dnav/pet/pet_move_wkly_dc_NUS-Z00_mbblpd_w.htm; "Industry Trend Analysis – A Limited Market For US Condensates," BMI Research, July 2015, http://www.oilandgasinsight.com/industry-trend-analysis-limited-market-us-condensates-sept-2015.

[2] Federal Register Volume 61, Number 106 (Friday, May 31, 1996), Rules and Regulations, Pages 27255-27258. http://www.gpo.gov/fdsys/pkg/FR-1996-05-31/html/96-13708.htm.

[3] See, for instance: Kenneth B. Medlock III, "To Lift or Not to Lift? The U.S. Crude Oil Export Ban: Implications for Price and Energy Security," Rice University, Baker Institute for Public Policy, March 2015, http://bakerinstitute.org/media/files/files/8c7e578e/CES-pub-CrudeExportLift-061815.pdf; Jason Bordoff and Trevor Houser, "Navigating the U.S. Crude Oil Export Debate," Columbia University, Center on Energy Policy, January 2015, http://energypolicy.columbia.edu/sites/default/files/energy/Navigating%20the%20US%20Oil%20Export%20Debate_January%202015.pdf.

[4] Spring 2015 Topline Results, http://www.utenergypoll.com/.

[5] Timothy Puko, "Gasoline Surges as Supply Lines Falter," The Wall Street Journal, 15 August 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Fox Rothschild LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Fox Rothschild LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions