Navigating the US Oil Export Debate
DESCRIPTION: Today the Center on Global Energy Policy released a new study, Navigating the U.S. Oil Export Debate, that reviews the origin and current form of U.S. crude export restrictions and analyzes the energy market, economic, security, geopolitical, trade and environmental implications of modifying or lifting those restrictions. The study, a collaboration between the Center and the Rhodium Group, was co-authored by Jason Bordoff and Trevor Houser.
OUTCOMES: Key Findings:
• The original rationale for crude export restrictions no longer applies. Today’s oil market looks very different than in the 1970s when current crude oil export restrictions were first put in place.
• If recent production growth rates continue, a shortage of US light crude refining capacity will likely reduce domestic crude prices relative to international levels, slowing the pace of upstream investment and future crude output.
• Permitting companies to export crude oil in greater quantities may reduce the rents refiners receive relative to leaving current restrictions in place, but will likely decrease the price Americans pay for gasoline, diesel and other petroleum products and benefit the US economy as a whole.
• While the nature of the impact of lifting crude export restrictions is relatively clear, the timing and magnitude is highly uncertain.
• In light of these and other variables, we estimate lifting current crude export restrictions could increase US crude production anywhere between 0 and 1.2 million barrels per day on average between now and 2025, and reduce domestic gasoline prices by between 0 and 12 cents per gallon.
• Allowing exports would make the US more resilient, not less, to supply disruptions elsewhere in the world.
• Lifting crude export restrictions is consistent with past and present US trade policy priorities, would enhance US credibility in current and future trade negotiations, and avoid creating a precedent that could harm US trade policy objectives down the road.
• Increased US crude production can weaken the economic power, fiscal strength and geopolitical influence of other large oil producing countries.
• To the extent allowing exports lowers crude oil and petroleum product prices, global oil demand will increase, along with oil-related CO2 emissions.