US Chamber of Commerce Blog
Well, that was quick.
ConocoPhillips and NuStar claim they have taken the lead in the race to export the first U.S. crude oil since Congress lifted the 40-year-old ban.
The two companies said they plan to finish loading the Eagle Ford crude cargo on Thursday at the Port of Corpus Christi. The announcement seemingly puts them in the lead over Houston-based Enterprise Products Partners, which said just last week that it will load 600,000 barrels of domestic light crude oil to Houston and load it onto a tanker in the first week of 2016.
Houston-based ConocoPhillips said it will sell the crude oil to Switzerland-based Vitol, which is an international trading company also buying the crude from Enterprise. San Antonio-based NuStar was contracted to transport and load the crude oil in Corpus Christi.
ConocoPhillips Chairman and CEO Ryan Lance has long served as one of the most vocal proponents of lifting the crude oil ban. While the Congress’ actions this month are his real victory, making the first export shipment could also serve as an additional symbolic win.
However, these companies racing to be the first to deliver U.S. oil to international customers is disproving that notion.
Earlier this year, ConocoPhillip’s Lance made the case for lifting the oil export ban at the U.S. Chamber:
We have to change the mind-set of scarcity. It’s really a hold-over from the last century. Today’s energy renaissance is real. It’s here for the long term. It can continue driving economic growth. And we can help ensure that by recognizing the new realities – and allowing oil exports.
Lance also sat down with Above the Fold to talk about how innovation and technology in the energy industry have driven America to a place of energy abundance.ConocoPhillips Chairman and CEO Ryan Lance Exclusive U.S. Chamber Interview Video of ConocoPhillips Chairman and CEO Ryan Lance Exclusive U.S. Chamber Interview
Congress earned plenty of praise.
The Wall Street Journal editorial page:
Allowing the U.S. industry to sell into the world market is a lifeline that will mitigate the domestic glut, and it may save numerous companies and thousands of jobs from bankruptcy.
It's about time.
The ban, imposed in response to the Arab oil embargoes of the 1970s, has long since outlived any usefulness it might have once had. More recently, it has done palpable harm to domestic producers.
Karen Harbert, president and CEO of the U.S Chamber’s Institute for 21st Century Energy:
By voting to lift the ban on oil exports, Congress has made it possible to unleash American energy around the world
So, should we expect massive amounts of American oil being loaded into supertankers right way?
No. In the short-term, low global oil prices will be the dominant factor.
“I wouldn’t expect to see anything dramatic immediately,” Christopher Guith, vice president at the Institute for 21st Century Energy told The Greeley Tribune. “At $35, $36, $37 a barrel, there’s not anywhere near as much arbitrage and moving crude around the world as there is when say it’s $110 a barrel.”
For now, U.S. producers are weathering the low-price storm by drilling wells and pumping oil more efficiently. Rig counts have gone down, but output per rig has increased.cnbc_working_oil_rigs_harder.png Facebook TweetCNBC chart: Oil rigs produce more oil.Source: CNBC.
Low oil prices won’t last forever. OPEC members might give up maintaining market share and cut back production, or international economic growth will accelerate, driving up oil demand.
In either case, once oil prices rise, U.S. companies will be able to take advantage of higher prices by selling to global markets.
“We have so much oil that when prices rise, production will grow and we’ll be able to export more of it,” said Scott Sheffield, Pioneer Natural Resources’ CEO, in a Wall Street Journal interview.
For the moment, ending the ban is still helpful, because pockets of buyers and sellers will be able to come together, Guith said:
There are anecdotal instances where there is supply and a buyer across a border, or across several borders, where that deal has not been able to be done. Now that can happen. I think we’ll see that a lot in south Texas and there are significant producers in the [Denver-Julesburg] Basin that also produce down there. Them doing good anywhere is good for folks in northern Colorado.
Over the long-term, ending the export ban will be good for American jobs and the economy. Bernard Weinstein, an economist at Southern Methodist University’s Maguire Energy Institute, told The Greeley Tribune, “I believe in the long-term, because of our advantages, particularly in the Gulf of Mexico and in the shale plays, we should be able to capture some percentage of the global market.”
Research has found that ending the ban will create as many as 859,000 jobs annually and add as much as $1.8 trillion to the economy.
After weeks of negotiations, congressional leaders have struck an agreement on a year-end tax and spending deal that will keep the government running through 2016. In addition, the accord includes several significant legislative victories that the U.S. Chamber of Commerce and the broader American business community have been working toward for months, years and – in some cases – decades.
“Congress continues to defy expectations that nothing would get done this year,” U.S. Chamber of Commerce President and CEO Tom Donohue said in a statement. “It already passed the first meaningful reform to entitlements in a generation, the first transportation bill in a decade, the first changes to our broken permitting process since 1969, Ex-Im Bank reauthorization, and Trade Promotion Authority.”
Though far from perfect, this latest legislative compromise “builds on these achievements by implementing a number of important business priorities that will strengthen economic growth, create jobs, and enhance America’s competitiveness and security,” Donohue added.
House leaders announced the deal on Tuesday, and both chambers are expected to pass the legislation by the end of the week. In the meantime, here’s a look at the six most important provisions in the agreement and why they will help bolster U.S. businesses and buoy the American economy.Oil export ban lifted
After four decades, the disco-era oil export ban will go the way of the pet rock. U.S. oil will be allowed to be sold on world markets just like any other commodity.
“Under the current policy, even Iran can sell its own oil—but the United States cannot. Lifting the outdated and unfair ban on oil exports was one of the Chamber’s top legislative priorities this year because it will improve global security and support hundreds of thousands of jobs at home,” Donohue said.
Congress hit a triple by delaying three Obamacare taxes.
First, the Cadillac Tax, a 40% excise tax on high-value health plans, will be delayed until 2020. Although it was to take effect in 2018, employers were already making major changes to the health benefits they offer their employees.
“The 40 percent excise tax on health benefits is undermining the viability of employer-sponsored insurance, which more than 160 million Americans depend on,” Donohue said. “Although the Chamber will continue to push for full repeal of the excise tax, the delay is a step in the right direction and gives employers additional time to protect the coverage valued by their employees.”
Second, the Medical Device Tax, a 2.3% tax on the medical device sales that took effect in 2013, has been suspended for 2016 and 2017. This tax has been tough on an industry made up of many young small- and medium-sized companies that are still looking to make their first profits. The harmful tax has pushed companies to cut back on R&D and investment as well as slowed hiring.
Third, the Health Insurance Tax (HIT) will be paused for 2017. The tax, which went into effect in 2014, applies to health plans sold on the fully-insured market, a market dominated by small businesses. The tax risks as many as 286,000 jobs, according to the National Federation of Independent Business.Cybersecurity deal reached
In a move that will better protect U.S. companies and consumers from the mounting threat of cyberattacks, House leaders included the Cybersecurity Information Sharing Act (CISA) in the year-end spending deal. The measure provides important legal protections to businesses that voluntarily share cybersecurity-related information with other companies and with the government, which will help companies and the country better detect and respond to attacks.
“Over the past several years, major cyberattacks have dominated the headlines and dramatically raised public awareness of online security,” Donohue said Tuesday. “This legislation, long championed by the Chamber, is our best chance yet to help address this economic and national security priority in a meaningful way and help prevent further attacks.”EB-5 program extended
Congress also agreed to renew an important immigration and economic development program that enables foreign investors to obtain permanent residency if they invest at least $1 million into a project that creates at least 10 jobs for U.S. workers. Known as the EB-5 Regional Center Program, the initiative generated $5.2 billion dollars in foreign direct investment into the U.S. between 2005 and 2013.
Many EB-5 projects are currently underway, and once they’re completed, the financial support provided by these foreign backers has the potential to spur as many as 31,000 new jobs for American workers.
Still, as Donohue noted, the program isn’t perfect, and lawmakers missed a prime opportunity with this legislation to not merely renew but also strengthen the EB-5 program.
“We look forward to working with all parties in the future to reform the program in a way that includes additional protections that are appropriate for ensuring the program’s integrity, while at the same time maintaining the program’s viability for businesses to encourage more foreign direct investment and job creation in the United States,” Donohue said.COOL repeal
Earlier this year, the World Trade Organization ruled against U.S. Country-of-Origin-Labeling (COOL) requirements for beef and pork and authorized Canada and Mexico to slap $1 billion in tariffs on U.S. goods in retaliation. These trade barriers with the United States’ two largest export markets would’ve cost thousands of American jobs.
“With retaliation expected within a matter of days, approval of this provision repealing the COOL rule for meat is the only way to avoid the substantial damage,” Donohue said.Tax extenders set in stone
In a separate piece of legislation negotiated alongside the spending deal, lawmakers struck an agreement to make permanent an array of important but currently temporary tax provisions. Often known as tax extenders, many of these longstanding tax rules have been rolled over for a year or two at a time for decades, leaving business owners mired in uncertainty regarding their annual tax burden.
Among the provisions that the deal makes permanent is what’s known as Section 179 expensing, under which small businesses will now be able to immediately expense up to $500,000 worth of investments in equipment and property every year, giving employers added incentive to invest into and expand their businesses. Congress also locked in an important research and development tax provision meant to encourage companies to invest in research related to, for instance, new product development.
“As the business community has long indicated, seamlessly extending, enhancing, or making permanent these important tax provisions this year provides a necessary bridge to comprehensive tax reform while preventing filing season delays and onerous tax increases,” Caroline Harris, the U.S. Chamber’s chief tax council and executive director of tax policy, wrote earlier this month.More to come?
Coupled with recent victories on issues like transportation funding and education reform, this year-end deal illustrates what federal lawmakers and the administration can accomplish when they work together to address our nation’s most pressing challenges. Let’s hope it’s a sign of things to come next year.
“As we move into 2016, members of Congress and the administration must continue to find common ground and compromise - without comprising their principles,” Donohue said. “As 2015 is proving, this can be done. And it can and must be done again - even in an election year - for the good of the country.”