Depending on who’s talking, lifting the long-standing limits on U.S. crude exports would be a boon to the economy and a benefit to U.S. drivers, or it would increase U.S. reliance on imported oil and weaken America’s foreign policy strategy. The U.S. government restricted crude oil exports in 1973 in response to an embargo from Arab members of OPEC. Now, with U.S. crude oil production increasing, the case is being made both for and against lifting the ban.
For the week ending May 23, the U.S. Energy Information Administration (EIA) said crude oil production averaged 8.4 million barrels per day (bpd), a 16 percent increase year-on-year. A new report from consulting group IHS says that lifting the ban would push that output to 11.2 million bpd. That, in turn, would save the United States about $67 billion per year on oil imports and lead to lower prices for retail gasoline, it says.
“At present, the current policy is discouraging additional crude oil supplies from being brought to market, which actually makes gasoline prices higher than they otherwise would be,” IHS said. Their argument is that more oil on the global market would push the price of oil down. That, in turn, would push gasoline prices lower because a good deal of what consumers pay at the pump is linked directly to the price of oil.
The IHS findings are similar to a March report from the American Petroleum Institute (API), an energy industry lobbying group. API’s report found that lifting the ban could spur the U.S. economy to grow by as much as $38 billion in 2020. Both groups, however, may be looking at only a narrow slice of the pie.