The Obama administration has officially threatened to veto a bill expected to pass the House of Representatives on Friday that would lift a ban on most domestically produced crude oil exports, but such a move could be tricky if the bill wins more Democratic support.
In a statement of administration policy, the Office of Management and Budget (OMB) said the White House "strongly opposes" HR 702. The bill passed the House Energy and Commerce Committee on Sept. 17 (see Daily GPI, Sept. 17) and was reported to the House for one hour of debate, and possible amendments, on Wednesday. A final House vote is scheduled for Friday.
"Legislation to remove crude export restrictions is not needed at this time," the OMB said Wednesday. "Rather, Congress should be focusing its efforts on supporting our transition to a low-carbon economy. It could do this through a variety of measures, including ending the billions of dollars a year in federal subsidies provided to oil companies and instead investing in wind, solar, energy efficiency, and other clean technologies to meet America's energy needs."
The OMB added that if HR 702 reached the president's desk, "his senior advisors would recommend that he veto the bill."
But a veto could be awkward because HR 702 does have some Democratic supporters, and it could garner more.
During a House Rules Committee hearing on Wednesday, Rep. Bobby Rush (D-IL) revealed that he had been "in serious negotiations" with the bill's sponsor, Rep. Joe Barton (R-TX), for the last two months. He said the talks were designed to try "to find a reasonable compromise that would allow me to support this bill.
"Help me to help you," Rush told Rep. Pete Sessions (R-TX), chairman of the House Rules Committee. "Help me to help the constituents of my district, and similarly situated districts across our nation, to assist all job-seeking Americans by allowing amendments to be entertained on this bill.
"I doubt there are any members here today under any false illusion that this bill would ever become law as it's currently drafted in this Congress with President Obama in office."
John Leganski, a spokesman for the House majority leader’s office, told NGI that a vote on HR 702 is scheduled for Friday at around noon.
HR 702 calls for repealing Section 103 of the Energy Policy and Conservation Act of 1975, enacted during the Carter administration, which gives the president the authority to restrict oil and natural gas exports, as well as exports of coal, petroleum products and petrochemical feedstocks.
Oil and gas industry groups, including the Independent Petroleum Association of America (IPAA), issued statements Wednesday urging Congress and the White House to lift the ban.
"In recent weeks, we've heard President Obama make a passionate case for 'leveling the playing field' for American workers and businesses," IPAA President Barry Russell said. "However, it's discouraging to see this White House negotiate a trans-Pacific trade agreement and authorize Iran to export its oil while America's energy producers are left tightening their belts and shutting down their rigs."
The American Petroleum Institute (API) said it was disappointed by the veto threat.
"There's no question that outdated laws are standing in the way of U.S. growth," said API Executive Vice President Louis Finkel. "Lawmakers are simply updating the law to reflect that 1970s-era restrictions don't make economic sense in an era of U.S. energy abundance. Both the House and Senate proposals preserve the administration's authority to limit exports should it ever be necessary."
Last month, analysts with the U.S. Energy Information Administration concluded that removing restrictions on U.S. crude oil exports would not cause domestic prices for petroleum products, such as gasoline, to skyrocket (see Shale Daily, Sept. 2). Nevertheless, White House Press Secretary Josh Earnest said the administration believes the decision to lift the ban should be made by the Department of Commerce, not lawmakers, and hinted at a veto (see Daily GPI, Sept. 16).
Republican lawmakers -- many of whom represent states with significant oil-producing shale plays such as the Bakken, Eagle Ford and Permian Basin -- strongly support HR 702.