Who Wins If America's Oil Export Ban Is Squashed?
- House Republicans plan on voting in the next couple of weeks on a bill that would lift the ban on U.S. oil exports.
- It’s unclear if the bill will gain enough support from congressional Democrats to pass.
- Elimination of the export ban would be good news for E&Ps and bad news for refiners.
The massive crude oil supply glut in the United States once again has Washington debating the elimination of the 40-year-old national ban on crude oil exportation. Republicans in the House of Representatives announced Tuesday that they plan to vote to remove the ban in coming weeks. If the ban is eventually repealed, the change could provide much-needed relief for struggling oil stocks.
Does It Have The Votes?
The bill’s chief sponsor, Texas Rep. Joe Barton, hopes that he can get all of the Republican House members and at least 20 Democrats to support the bill.
“This is a policy decision that is made over at the Commerce Department, and for that reason we wouldn’t support legislation like the one that’s been put forward by Republicans,” White House spokesman Josh Earnest said in response to news of the vote.
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Several years ago, it was unimaginable that the US would consider lifting the ban on oil exports. However, the U.S. shale production boom and the subsequent crash in oil prices has put the industry in a difficult situation.
The obvious potential beneficiaries of a repeal of the export ban are the more than a dozen oil companies that have aggressively lobbied Congress to lift the ban over the past year, including Continental Resources Inc (NYSE: CLR), ConocoPhillips (NYSE: COP) and Marathon Oil Corp (NYSE: MRO).
In a 2014 report, S&P said that exploration and production companies with exposure to Eagle Ford Shale would be the biggest winners from elimination of the export ban. These companies include EOG Resources Inc (NYSE: EOG), Pioneer Natural Resources Co (NYSE: PXD), Anadarko Petroleum Corp (NYSE: APC), Devon Energy Corp (NYSE: DVN) and Marathon.
Many U.S. refiners would likely see shrinking margins as well. PBF Energy Inc (NYSE: PBF) has led a coalition of four refiners that have recently been lobbying Congress in opposition to elimination of the export ban.
At The Pump
Could car-driving Americans be impacted? According to a study by the U.S. Energy Information Administration, probably not.
“Petroleum product prices in the United States, including gasoline prices, would be either unchanged or slightly reduced by the removal of current restrictions on crude oil exports," the report concluded.
Separately, Barton recently told CNNMoney that, "It doesn't raise gasoline prices. It puts people back to work."
Disclosure: the author holds no position in the stocks mentioned.
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