Consumers around the world have been reeling from record gasoline prices and other high energy prices this spring and summer.
But a recent study by ICF International and presented by the American Exploration and Production Council and the American Petroleum Institute shows that markets would be worse off if the United States had not resumed crude oil exports in December 2015. .
“As our research shows, the domestic and international oil market would likely be worse off today in the absence of U.S. crude oil exports and the growth in domestic production they have enabled. IHS Markit noted last fall, writing in a policy brief that a ban on U.S. crude oil exports “would generate more upward pressure on crude oil prices – and thus raise the price of U.S. gasoline” , Scott Lauermann, head of media relations with API, told the Reporter-Telegram via email.
Liz Bowman, vice president of communications with AXPC, agreed that the study found that crude exports actually lower domestic energy prices.
“In addition to this study, we have a blog that explains that stopping crude exports would further increase prices, not bring them down,” she told the Reporter-Telegram via email.
The council’s blog makes the following points about the impact of stopping crude exports:
• U.S. crude oil exports increase global crude oil supply, helping to lower prices at the pump
• The expansion of oil production in the United States has been linked to the decline in gasoline prices
• Restricting U.S. crude oil exports could raise the cost of gasoline and other refined products at a time when Americans are already paying record prices
• Refined products are global commodities and are closely correlated to the global crude oil benchmark (Brent)
IFC International analyzed data from the six years since exports resumed and found that favorable open markets had increased U.S. oil and gas development, which reduced world oil prices by $1.93 a barrel over those six years, added $161 billion to the gross domestic product of the United States and created nearly 50,000 jobs. .
“The export of domestic production that exceeds domestic demand adds oil to global supply, thereby reducing prices,” Mickey Cargile of Cargile Investment Management told The Reporter-Telegram via email. “Restricting these exports would reduce global supply and increase prices.”
The Midlander added that the oil currently being exported would otherwise have no market. Excess production cannot be moved economically to many refineries, he said, and many refineries are not properly equipped to refine domestic production.
The study echoed Cargile’s assertion that rising U.S. oil production has expanded global supply, reducing prices for crude and refined products. More open markets helped boost US drilling activity, boosting US oil production by 1.8 billion barrels, not to mention associated natural gas and natural gas liquids.
Exports reduced U.S. consumer spending on refined products and natural gas by $92 billion over those six years, the study found. These lower consumer prices and higher revenues for US producers, which offset revenue losses for US refiners, increased US GDP by $161 billion. They also improved the US trade balance by $178 billion.
The study also credits exports for boosting U.S. employment by an average of 48,000 jobs through new hiring in the upstream oil and gas sector. Jobs have been created for, among others, derrick operators, frontline supervisors and managers, rotary drill operators, roustabouts and service unit operators, and have created direct, indirect and induced jobs .