Congress will end the 40-year-old ban on crude oil exports as part of a spending and tax package to be voted on Thursday night. The bill will also include five-year extensions for wind and solar energy tax breaks — a key condition set by Democrats in negotiations to lift the ban.
Domestic producers will benefit from the first access to global markets since the Arab oil embargo of the ‘70s. Refiners, on the other hand, will likely see their margins shrink as the price spread between domestic and foreign crude narrows. The Energy Information Administration said in September refiners’ profits could be $22 billion per year lower by 2025 without the ban.
Argus Media notes that a proposal to grant some refiners a $3-per-barrel tax credit failed to gain traction given its high projected costs. The American Fuel and Petrochemical Manufacturers opposed the refinery tax credit.
Non-integrated refiners, however, will be allowed to count 75% of their oil transportation costs toward an existing manufacturing tax credit, Bloomberg notes. An analyst at Frost & Sullivan said domestic refiners will stay "ahead of the game" and will be able to make products cheaper than anywhere else in the world, even without the ban.
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