Gasoline prices in the U.S. would be left unchanged or even decline further if the ban on oil exports is lifted, according to an analysis by the Energy Information Administration.
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As a result of growing oil production, some lawmakers have questioned whether the U.S. needs to maintain current laws that effectively prohibit companies from exporting raw oil out of the country. The ban has been in place since the 1970s.
Opponents of the potential move have argued that oil and refined products like gasoline would become more expensive if exports are given the green light. The EIA addressed these concerns in a new study, which examines the impact of crude exports on the U.S.
Based on EIA modeling, projections for oil supplies and other items remain the same with or without export restrictions, as long as overall U.S. production is 10.6 million barrels per day or less over the next decade.
Other test cases show a different story.
The EIA considered the impact if domestic crude output ranges between 11.7 million and 13.6 million barrels per day by 2025. In that scenario, lifting the export ban would lead to slightly lower gasoline prices for consumers.
Prices at the pump should fall because companies would boost drilling activity to accommodate exports, and they would ship less gasoline and other petroleum products out of the country. Also, the study noted that U.S. retail gasoline has closer ties to Brent crude, the international benchmark, than West Texas Intermediate prices.
The agency did offer some caveats. Levels of domestic processing capacity could change, while it remains to be seen how much global producers will pull back in response to rising U.S. supplies.
The EIA also said export studies that say current laws prevent all exports likely show more significant changes to production and prices. Federal policies do not ban oil exports across the board. Companies are not allowed to ship raw oil, but a type of crude known as condensate, which is lightly processed, is eligible.
Domestic crude production surged from 5.4 million barrels per day in 2009 to 8.7 million b/d in 2014, contributing to a sharp decline in oil prices. Nymex WTI futures are down more than half compared to their highs last year.
Although drillers have made drastic cuts, the nation’s flow of oil continues to show gains. In the first half of 2015, production averaged 9.4 million barrels per day.