American Oil and Gas Reporter - June 2018 - 27

Rising Gasoline Prices
Prompt Calls To Revive Ban
On U.S. Crude Exports

"All of the American oil production that
can be refined in the United States is being
used here. U.S. refineries were built to

One of the most transparent price signals Americans see is
the price of gasoline, posted daily on signs outside gas stations.
That price can influence how much we drive, the efficiency of
the cars we purchase and the degree to which we will complain
to elected officials about pump prices. Since February 2016,
consumers across the country have been experiencing steadily
rising gasoline prices.
At the same time, U.S. crude oil production also is rising
steadily and attaining record levels. To the average consumer,
these facts are hard to reconcile. An accurate explanation
requires a discussion of crude oil density, world demand and refinery configurations. That discussion is difficult to put forward
concisely when some members of Congress argue that the
United States should cease crude oil exports.
Senator Edward Markey, D-Ma., has issued a report calling for
Congress to reinstate the crude oil export ban "to ensure that
American crude stays here, insulates us to the greatest extent
possible from global shocks, and protects American consumers at
the pump." Yet this simplistic argument only panders to the public,
many of whom do not know the difference between gasoline and
natural gas, much less the details of American refineries and
product output. But the facts are important to understanding why
crude oil exports help our economy and should not be banned.
All of the American oil production that can be refined in the
United States is being used here. U.S. refineries were built to
process heavier, sour crudes. The newest refinery with significant
downstream unit capacity came on line in 1977. Modifications
to existing units or new green-field refineries face enormous
regulatory hurdles. Since 2007, dramatic increases in production
of lighter, sweeter U.S. crude has backed out 48 percent of
imports from members of the Organization of Petroleum
Exporting Countries. Oil imports have dropped from 60 percent
of total U.S. consumption in 2005 to only 17 percent now
(Figure 1). U.S. refineries requiring heavier crude primarily
FIGURE 1
Crude Oil Balance

process heavier, sour crudes.

rely on imports, with Canada supplying 43 percent of that total.
If U.S. refineries cannot take all the crude our country produces,
the ability to export allows this crude to boost international
supplies, which helps tamp down on world oil prices. Additionally,
it provides U.S. allies with supply alternatives to OPEC and
Russia. Not only is American crude oil part of the world market,
America's cutting-edge refineries are major contributors to the
international petroleum products market. Utilization of refinery
operating capacity has hovered around 90 percent annually since
2012, generating fuel products to fill the American market and
export significant products. In 2017, much of the total crude oil
and petroleum product exports went to our neighbors: Mexico
received 16.7 percent, and Canada received 13.24 percent.
These crude oil and product exports help allies and strengthen
the U.S. trade balance.
These significant benefits would disappear if Congress reimposed a ban on crude oil exports. Geopolitical tensions and international supply tightness clearly affect both crude oil and
gasoline prices. However, U.S. producers' substantial efforts to
expand the supply of American crude oil during the past five
years have dampened the impact of these global events. Even
so, we cannot insulate our country from these effects entirely.
Although a small but vocal group in Congress may push to
re-impose a crude oil export ban, there is hope that reason will
prevail. Senator Lisa Murkowski, R-Ak., chair of the Senate
Committee on Energy and Natural Resources, states: "I agree
that OPEC's supply restrictions are driving prices higher and
should be addressed, but I was stunned to hear my colleagues
encouraging more production from the likes of Iran and Saudi
Arabia, rather than right here in America, as the solution. This
is pretty simple. If you don't support access, leasing, production,
pipelines, refineries, or the reasonable regulation of all of those,
you'll be left at the mercy of countries that don't like us."
All of us-especially American producers-would pay the price.
r

12,000

SUSAN GINSBERG is vice
Monthly Thous. (bbl/d)

10,000

8,000

6,000

4,000

2,000

0
2004

2006

2008

2010

2012

2014

2016

2018

president of crude oil and natural gas regulatory affairs for
the Independent Petroleum Association of America. She covers legislation and regulation,
focusing on the CFTC and
FERC. Her experience in natural gas regulatory affairs
spans 25 years.
JUNE 2018 27

American Oil and Gas Reporter - June 2018

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