The U.S. ban on exporting oil may soon be a thing of the past.
There's growing momentum to kill the restriction and a deal could be reached before the end of the year as part of a broader spending and tax bill that's making its way through Congress.
The restriction was signed into law on December 22, 1975 when the Organization of the Petroleum Exporting Countries oil embargo created a shortage that slammed the American economy with skyrocketing prices.
Today, the world has too much oil -- thanks largely to the American shale oil boom. That's why crude oil prices have crashed below $35.00 U.S. a barrel and a gallon of gasoline is on the verge of falling below $2.00 U.S. per gallon.
Therefore, there is no longer an oil scarcity that justifies keeping it at home. In fact there's too much of it.
A major reason for the momentum is the fact that gasoline prices are down by half since peaking in 2008 at $4.00 U.S. per gallon. Politicians have less reason to fear voters will blame them for high gas prices caused by allowing U.S. oil to be sold overseas.
But gas prices are set by Brent oil, the global benchmark.
In fact, U.S. oil actually trades at a discount to Brent. That's because American oil producers can't currently export to overseas refiners who are willing to pay a bit more.
American producers will be able to access a wider market if the export ban is lifted. That's why the move is likely to make oil and gas prices in the future cheaper than they would be otherwise.
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