WILLISTON, N.D. – The U.S. ban on crude oil exports stands the best chance of being lifted when linked to highway funding legislation, said U.S. Senator John Hoeven, a Republican from North Dakota.
The 1970s-era ban on most oil exports is deeply unpopular in North Dakota and other crude-producing U.S. states, with energy executives chafing at the limited access to global markets.
Various stand-alone measures in Congress to pass a repeal have failed, and President Barack Obama has threatened to veto any such legislation that reaches his desk, saying the focus should be on renewable energies.
Now supporters of a repeal are trying several tactics that they hope will force Obama’s hand.
Hoeven said a bill providing funds for new bridges and roads, potentially by selling oil from the Strategic Petroleum Reserve, would be the best way to end the restrictions.
The Senate and House of Representatives have each passed versions of the proposal. Hoeven said he hoped to add the export clause in a negotiated final version, in a tacit bet that Obama will not put transportation funding in jeopardy with a veto of the entire bill.
“Using the Strategic Petroleum Reserve for a strong portion of funding for this highway bill makes a strong case to keep our oil and gas industry viable,” Hoeven said on Thursday night on the sidelines of the annual banquet of the Williston, North Dakota, chapter of the American Petroleum Institute trade group.
The Strategic Petroleum Reserve holds more than 695 million barrels of crude in Texas and Louisiana, but economists have cautioned that tapping it now, with oil prices down more than 50 percent in the past year, makes little financial sense.
North Dakota produces more than 1.1 million barrels of oil per day, making it the second-largest producing state after Texas.
The industry itself has undertaken various technological and cost-cutting measures to cope with that price drop, and Hoeven said lifting the ban is the best way to help oil producers, among his state’s largest employers.
“With low prices, we have to take a long-term view of our oil basin here,” Hoeven said. “We’re in a global battle now as to who will produce oil and gas.”
Hoeven’s North Dakota counterpart in the Senate, Democrat Heidi Heitkamp, told Reuters last month that any proposal for lifting the ban would only succeed if it is tied to renewable energy incentives.
(Reporting by Ernest Scheyder; Editing by Lisa Von Ahn)
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