American Oil and Gas Reporter - February 2015 - 20

IndustryDigest
University Study Says
U.S. Will Benefit If Ban
On Crude Exports Ends
NEW YORK-If the United States
removes its restrictions on exporting
crude oil, domestic production could
increase by as much as 1.2 million
barrels a day through 2025 and gasoline
prices would drop, perhaps by as much
as 12 cents a gallon, a university study
asserts.
The report from the Rhodium Group
and the Center on Global Energy Policy
at Columbia University, Navigating the
U.S. Oil Export Debate, by Jason
Bordoff and Trevor Houser, says the
original rationales for export restrictions
imposed in the 1970s no longer apply.
The United States adopted domestic
price controls in that decade to combat
inflation, and crude export restrictions
were needed to make those controls
effective, the study says.
Virtually all the growth in U.S. crude
oil output is lightweight oil and has

lower sulfur content than the Canadian,
Mexican, Venezuelan and Middle
Eastern crudes that many U.S. refineries
are configured to process, the study
notes. Refineries elsewhere in the world
process light oil, but U.S. law largely
prohibits domestic crude exports.
"If recent production growth rates
continue, a shortage of U.S. light crude
refining capacity likely will reduce
domestic crude prices relative to
international levels, slowing the pace
of upstream investment and future
crude output," the report warns.
"Modifying or removing crude export
restrictions would prevent this from
occurring by allowing domestic
producers to compete in global
markets."
Allowing companies to export crude
oil in greater quantities may reduce the
rent that refiners receive relative to
leaving restrictions in place, but likely
will decrease the prices consumers pay
for gasoline, diesel and other petroleum
products, the researchers conclude.

Allowing exports would make the
United States more resilient to supply
disruptions, while greater global market
integration would make the nation's oil
supply more responsive to international
developments, mitigating impacts on
U.S. consumers and its economy, the
study asserts.
Navigating the U.S. Oil Export
Debate says lifting crude export
restrictions is consistent with past and
present U.S. trade policy priorities,
would enhance U.S. credibility in trade
negotiations, and would avoid creating a
precedent that could harm future
national trade policy objectives.
The study notes that the decline in
crude oil prices is slowing the pace of
U.S. production growth and may delay
the point at which domestic light crude
refining capacity shortages occur.
The report is available at
http://energypolicy.columbia.edu/onthe-record/navigating-us-oil-exportdebate. Ì

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American Oil and Gas Reporter - February 2015

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