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OIL AND GAS
House move on oil exports moot, White House says
by Daniel J. Graeber
Washington (UPI) Sep 18, 2015


Oil plummets after Fed decision
New York (UPI) Sep 18, 2015 - A decision by the U.S. Federal Reserve to keep rates steady and signs of increased U.S. oil production pushed oil prices deeply into negative territory Friday.

Downward momentum from the Thursday session spilled over into early Friday trading in New York. West Texas Intermediate, the U.S. benchmark for crude oil prices, was down nearly 3.5 percent at the opening bell to $45.29 per barrel. Brent crude oil lost 1.7 percent to $48.23 per barrel.

Oil prices moved lower ahead of Thursday's announcement from the Federal Reserve. Minutes from the board said current rate levels were appropriate, though concerns exist on the margins of the global economy.

"Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term," the minutes read.

A report early this week from the Organization of Economic Cooperation and Development said global economic growth was sub-par.

Concerns about the ability of the European economy to emerge from recession and a slowdown in Asian economies adds downward pressure to a market already plagued by low demand and oversupplies.

Data from the American Petroleum Institute show U.S. crude oil production in August is at its highest level since 1972. The August average of 9.3 million barrels of oil per day is 5.4 percent above last year.

"U.S. crude oil and gasoline production soared to record highs in August as the industry finds innovative ways to increase production even as crude prices have fallen," API Director of Statistics Hazem Arafa said in an emailed statement.

Congressional moves to repeal a crude oil exports ban are irrelevant because those decisions rest with the Commerce Department, the White House said.

The House Energy and Commerce Committee approved a measure to lift a ban on U.S. crude oil exports. The ban was enacted in the 1970s after Arab members of the Organization of Petroleum Exporting Countries briefly stopped exporting oil to the United States because of Washington's support for Israel.

Rep. Joe Barton, R-Texas, who introduced the bill, said the U.S. oil boom needs to benefit overseas allies as much as it has the domestic economy.

"The ban on exporting crude oil imposes an estimated $200 billion - $600 billion cost to the U.S. economy, discourages crude oil production, prevents the creation of jobs, and causes higher gasoline prices for U.S. consumers," he said in a statement.

The White House said it opposes the bill because it's largely a moot point

"We are opposed to this bill, and the reason that we oppose the bill is because this is a decision that actually can be made and should be made, in our view, by the Commerce Department," White House spokesman Josh Earnest said after the bill passed.

Two companies received permits last year from the U.S. Bureau of Industry and Security, to export an ultra-light form of oil called condensate from the U.S. market. Processing steps mean the lighter form of oil, found in some U.S. shale basins, doesn't qualify as crude oil under the terms of U.S. law.

BHP Billiton, which this week pressed for ending the ban in a speech to the U.S. Chamber of Commerce, said in November it concluded that condensate taken from the Eagle Ford shale play in Texas was legally eligible for exports.

David Porter, chairman of the regulatory Railroad Commission of Texas, said the federal government could help alleviate pressure during the oil price downturn by erasing the ban.

Earnest stressed the White House position on legislative action to overturn the ban was well known.

"I don't have a specific veto threat to offer at this point," he said. "But our position on this bill is crystal- clear."


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