U.S. Crude Oil Export Ban

Exporting crude oil from the U.S. for decades was largely illegal. Until lately, it had also been mostly unthinkable. Domestic production had been declining for decades and the country seemed hopelessly addicted to foreign supplies. Not anymore. Horizontal drilling and hydraulic fracturing have squeezed torrents of oil from shale rock deep underground. The U.S. produced more oil in 2013 than it imported for the first time in two decades and in June 2015 it surpassed Russia and Saudi Arabia to become the world’s biggest producer of oil and gas. Six months later, with an assist from a budget bill, the ban was headed for the history books.

Congress voted in December to lift the 40-year-old ban on crude oil exports as part of a broader spending bill that averted the possibility of a government shutdown. The measure, which had the support of President Barack Obama, scrapped the trade restrictions in exchange for extending renewable energy tax credits — measures sought by primarily by Democratic lawmakers to cushion the potential impact on the environment. The U.S. had blocked most exports of crude oil — the stuff that comes from the ground before being turned into gasoline, heating fuel and other useful products — since the 1975 Arab oil embargo shocked the economy. Now production, which averaged 7.4 million barrels a day in 2013, will average 9 million barrels a day by the end of 2015. This is pushing down domestic prices more than foreign ones: West Texas Intermediate crude will average $49.53 a barrel in 2015, while Brent, the international benchmark, will average $53.96, the U.S. Energy Department estimates. In 2014, the U.S. began to open that door a crack when it allowed export of a type of minimally processed ultra-light oil known as condensate. In August 2015, it permitted an exchange of some crude oil with Mexico.