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U.S. highway bill should include oil export provision – senator

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.

In related news, House votes to keep highway spending level, ignores warnings.

(Reporting by Ernest Scheyder; Editing by Lisa Von Ahn)

This article was from Reuters and was legally licensed through the NewsCred publisher network.

52 comments

  1. About time the republicans woke up!

  2. Not the kind of ‘pipe’ the Bakken needed.

  3. No help from the Obama group… They’ll destroy another industry in our country

  4. Read article to see real genius
    Hoeven wants to sell SPR oil to raise fund for highway.. taking SPR oil selling domestic or exporting would only add to the glut and prolong the drlg sector recession.
    How can the US export into a gluted market with the global price below what the US requires to export>
    Does Hoeven and fellow delusionists have some secret magic trick that will cause OPEC to reduce production, raise the price of oil and surrender market share to the US-
    The only thing that move OPEC is when they are boke

    • Thad, you keep claiming that there’s a price needed to export. Total nonsense. There’s only a price needed to produce. Otherwise, the well would be shut in. Once produced, the oil should be sold to highest bidder anywhere in the world. Why are you so determined to protect OPEC?

    • So you are claiming the US can export oil at the present global price-? And it would get preference to the other oil in the glut-?
      Domestic use why is imported oil being bought instead of US -?

    • The imported oil is because the cost of getting bakken oil from its remote areas are too expensive via rail. So new pipeline infrastructure is needed to get the oil to refineries at a competitive price.

      There is a sandpiper pipeline coming that will help a little, and the.options will help make rail want to compete pricewise. Right now they have no incentive to do so.

    • Harrison Weightman — agreed we do need more pipelines. But not the K-XL wrong direction- wrong proiduct
      But why could eagleford light not be pipelined or lankered out of Corpus- or Texas City

    • Thad, the US already exports 500 kb/d to eastern Canada in direct competition with OPEC. Obviously the price is not too low. In fact, waterborne Eagle Ford crude commands a premium above WTI due to high quality. The US imports mostly heavy crude because it’s cheaper than light crude and modern refineries are designed to get high yields from heavy crude.

  5. Thad Daly – I believe that oil export should be lifted to allow our oil industry to compete with the opec producers on a level playing field. It would take away the economic advantage that opec has with the ability to do their resources whatever makes the most sense financially.

    Also the bakken crude is forced to sell to American refineries who know that we cannot export it so they are taking full advantage of buying it super cheap, but since you can export gasoline, the cost of gas hasn’t dropped as much as it had when oil was this cheap last time.

    Government regulation hampers industry and even competing against countries whos government’s support the oil industry, we can’t adapt to changing market conditions as quickly.

    • How can the US export into a gluted market with the global price below what the US requires to export>
      What that will cause OPEC to reduce production, raise the price of oil and surrender market share to the US-
      I am not against exporting- just do not see how

    • Then let’s level the playing field and give it a shot Thad! Can’t sit on the porch peeing like a puppy, let’s bark with the big dogs!

    • It’s that I believe that while opec doesn’t have any competition to the Asian market or any other market outside the US, they enjoy a captive market for their product.
      I believe that the world is desperate for a stable source of crude oil where it isn’t used so easily as a political weapon.

      And this theory is supported by the fact that japan broke ties with us because of the yam kippur war and our support of Israel. The opec used oil as a weapon, and the entire balance of political power shifted because the other countries were desperate not to lose access to oil. If we produced and exported oil, or at least, if we were able to legally do so, I believe many things would change.

    • Harrison Weightman – That does not answer the question-

    • Would you elaborate thad? I believe you asked how the us could export into a glutted market.
      And in answer, I believe that US might export based on factors that aren’t entirely cost based alone.

      And what will cause opec to share the market is when they don’t hold a stanglers grip on the rest of the world’s oil supply. Their power will be even weaker and they may fragment even further. I don’t believe that the current policy gives any great benefit to America, in fact I think it harms us.

    • Steve Gunderson — so tell us how level the playing field — the question has never been answered since OPEC came in to existance

    • The US already exports into a glutted market. We export 500,000 bpd to eastern Canada in direct competition with OPEC. Thad is obsessed with making business decisions for US producers. They don’t need Thad meddling in their decisions. They just need Thad and his buddy Obama to get out of the way.

    • Harrison Weightman — OPEC does not hold a strangle on the worlds supply of oil, Their direct control is only in their own production rate.
      Global oil is a commodity market- simply by controlling their own production they can short the supply in relation to demand raising the price OR flood the supply causing a glut. All exporters whether OPEC or non-OPEC have to mach the price– Price higher nobody buys, price low not possible as Saudi has the lostest production cost in the world— And Saudi is willing to go so low as to lose profits to cause a recession in other oil producing countries so as to retain market share–
      There is only two things that will break OPEC
      1. that OPEC by maintaining their production rate and losing profit margin goes bankrupt
      2. that a non – OPEC producer and produce and export at a lower price

    • Thad, you attribute too much control to OPEC. All OPEC has done is to maintain production at 30-31 million bpd. They have neither flooded the market nor have they trimmed production to support prices. OPEC has misjudged the high-cost producers. OPEC had expected the high-cost guys to have shut in far more production than they have. OPEC desperately wants someone else to lose market share, but it has not really happened enough to raise prices. There is no such thing as price matching. Oil is sold based on transparent formulas with marker crudes, such as WTI, Brent, Dubai, that change daily due to public trading. In a oversupplied market, no one has control over prices. Any large producer, not just OPEC, could step up to be swing producer to support prices. So far, no one has. Nor has there been sufficient natural depletion to do the same thing.

    • I still believe that nations choose to do business with the US often because we are a much more stable option than the Middle East or others that choose to use oil and natural gas as a weapon.

      Russia did this natural gas to influence politics and Mideast producers used it to force allies away from the US.

    • Paul Smith — so why has OPEC made no effort to raise the price they are bleeding badly

    • Because the big dog is Saudi Arabia. They are tired of being the swing producer and losing market share that takes years to get back. Although the Saudis are bleeding their sovereign wealth at a fast clip, it would take about four years to deplete it all. I guess they think they can wait out others, or who knows, we might hear some surprising news at the Dec meeting.

    • Harrison Weightman Oil from the US- would it be that stable–? the US still has to import some 30% of needs Is that stability worth an extra $20-25 / bbl – ?
      Natural gas is a bit different as there is a surplus produced in the US and facilities are being built for export as LNG, 4 LNG plants within 24 miles of my home in SW La… Still it is tight US shipping via LNG tankers and Russia delivering through existing pipelines—

    • Current DOE regulations limit LNG exports only to those countries with which we have a free trade agreement. So exporting to Europe to compete against Russia is not currently permitted.

    • Obama shutting down keystone pipeline ensures that USA will continue to buy oil from Saudi Arabia and south America

    • It’s really an export bill, and a pipeline east to west that we need. The keystone wouldn’t have done a huge amount for the us oil, but mostly would have helped the oil sands in Canada.
      I think that the better pipeline for the bakken is the sand piper that is being put forth.

    • The drilling companies and refineries are owned by the same people dummy

  6. The entire reason we drilled in the bakken in the first place was to find domestic oil. Lower our dependence on foreign oil, and possible lower the prices for consumers. Now that that has been achieved, why are we trying to give the oil away, especially at these dirt cheap prices?

    • Only bc it made economical sense. The players have made money and that’s what drives businesses. It never had anything to do with oil independence

    • Oil is sold to highest bidder. Export prices would represent a foreign refinery that’s bidding higher than a domestic one. Why force a producer to sell to the lower bidder?

    • Because someday we will be out of oil, and we will have to import it again. And I would rather that someday be a day in a very very very long time. If we don’t have any oil, then the country we get it from has complete control over our economy. I’d rather not see that day

  7. Even if XL would help Canada the most, what is wrong with helping our closest ally and country most like us?

  8. They don’t want oil from Canada but the water so Canada should get payed for water not give it away the coast is more then oil would be or go with out

  9. We should not export one drop of America oil until we have stopped all of the oil that is imported. 9 million barrels a day. We should use our resources

  10. This is not complicated. Drooling from government makes it sound that way …we have resources, oil , coal and wind and water. .Until we have a leader from the state that is a true stateman, will the whole state be sound…you watch this legislation and you wonder who ties their shoes..The time, money spent on non issue legislation that does not benefit the state is irresponsible. It just continues with our leaders playing a game of checkers…if you talk with these preschool

  11. You have to be stupid or greedy beyond belief to believe exporting a vital national resource like crude oil is in America’s best interest.

    It’s time to nationalize the oil industry.

  12. Who cares go solar go electric

  13. In light of the weekend events in Paris, let’s stop importing and use our Bakke crude.