A new study from IHS has said that lifting the 1970s restrictions on US crude oil exports would lead to further increases in domestic oil production, resulting in lower gasoline prices while supporting nearly 1 million additional jobs at the peak. The report has also said that doing away with exports restrictions would also benefit US household income, GDP and government revenues. The resulting increase in domestic oil production would be so great that it would cut the US oil import bill by an average of US$ 67 billion/y.
Among the key findings of the study, ‘US Crude Oil Export Decision: Assessing the Impact of Export Ban and Free Trade on the US Economy’, the following was found:
- US oil production would increase, beginning with an additional 949 000 bpd in 2016. The ability to export crude would then result in more than 1 million bpd in extra production each year going forward, peaking at 1.3 million bpd of additional production in 2030.
- US crude exports would reach 665 000 bpd in 2016 and rise to more than 1.5 million bpd in 2020. Crude exports would peak at more than 1.7 million bpd in 2025 before averaging more than 1.5 million bpd for the remainder of the study period.
- The resulting increase in crude production would support 359 000 more jobs in 2016 before peaking at 964 000 additional jobs supported in 2018. 700 000 additional jobs would be supported in 2020 with an annual average of 222 000 additional jobs supported for the remaining years of the study period.
- GDP would rise by nearly US$ 73 billion in 2016. The amount would increase to more than US$ 134 billion additional GDP in 2018 and settle at an additional US$ 106 billion in 2020. It would then average an additional US$ 73 billion /y for the remainder of the study period.
- Total government revenues would increase by a combined US$ 1.3 trillion over the course of the study period, beginning with nearly US$ 29 billion additional revenues generated in 2016. That amount would rise to US$ 42 billion in 2020 and grow to US$ 105 billion in 2025 before reaching more than US$ 158 billion in 2030.
- The average disposable income per household would increase by an additional US$ 391 in 2018 as benefits from increased investment, additional jobs and lower gasoline prices are passed along to consumers. That figure is expected to be an additional US$ 322 in 2020 and average an additional US$ 193 /y for the remainder of the study period.
Daniel Yergin, IHS vice chairman said, ‘the 1970s era policy restricting crude oil exports, a vestige from a price controls system that ended in 1981, is a remnant from another time. It does not reflect the dramatic turnaround in domestic oil production, led by tight oil, which has reversed the US’ oil position so significantly, The US has cut its dependence on foreign oil in half since 2005 and its production gains have exceeded that of the rest of the world in recent years. The economic contributions of this turnaround have been substantial. Allowing the free trade of oil would expand those gains for consumers and the wider economy.’
IHS director and study coauthor, James Fallon said, ‘there are different types of oil and they require different kinds of refining processes and facilities. And as a result of the boom in tight oil production, the US is exceeding its capacity to process that type of crude. Current export restrictions mean that light crude has to be sold at a sharp discount to compensate for the extra cost of refining it in facilities that were not designed for it. That gridlock is preventing additional investment and production, and the additional economic benefits, that could otherwise take place.’
Kurt Barrow, study coauthor and IHS vice president of downstream energy said, ‘if crude oil export restrictions were lifted, the resulting increase in oil production would increase supply and actually lower gasoline prices. The gasoline trade and price fundamentals are clear.’
Adapted from press release by Claira Lloyd
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/30052014/us_export_restrictions_ihs_report/