The Ban on Exporting Crude Oil
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PBPA Statement on Iran Nuclear Agreement
Today, the United States announced an historic deal with Iran to curb that country’s nuclear program in exchange for lifting international sanctions on multiple aspects of Iran’s economy, including the export of crude oil.
In response to this deal, PBPA President Ben Shepperd issued the following statement:
“While we applaud the Administration’s efforts to contain the global threat posed by a nuclear-armed Iran, it must be noted the US is now allowing a state sponsor of terrorism to engage in the global petroleum market while preventing U.S. producers from doing the same.
The economic pressure that brought Iran to the bargaining table exists right here at home – impacting American companies, American workers, and American families.
We must lift the ban on crude oil exports and give our allies around the world a safe, reliable source of petroleum from the United States, not just additional supplies from unstable countries like Iran.”
– Ben Shepperd, PBPA President
July 14, 2015
About the Ban on Crude Oil Exports
Currently, U.S. crude oil producers are prohibited from exporting their products for sale on the world market. Crude produced in the U.S. can only be sold to domestic refiners, although those refiners may sell their refined products, like gasoline, around the world. This restriction places domestic crude oil in a very small group of commodities barred from accessing the free market. The only others are horses for slaughter and western red cedar – that’s it.
This departure from our free market system is a leftover regulation hastily created in the aftermath of the Arab Oil Embargo of the 1970s – a time when domestic oil production looked very different than it does today.
Today, advanced technologies like hydraulic fracturing and horizontal drilling have unlocked petroleum from shale formations that was previously thought too difficult or costly to extract. This energy renaissance has helped transform the U.S. from a nation dependent on oil imported from unstable regions of the world into a potential export powerhouse.
Get the Facts!
FACT: Allowing the export of U.S. crude oil will lower gas prices for consumers.
Currently, U.S. crude oil is a “stranded commodity,” traded separately from the world market and often at a lower price. Prices at the pump are set by the global crude market, not the lower domestic price. Lifting the ban would add U.S. crude to the world market, increasing supply and lowering gas prices.
Columbia University, Rice University, the Aspen Institute, the Brookings Institute, IHS Energy, ICF International, and the U.S. Government Accountability Office (GAO) all agree that lifting the ban on exports will lower gas prices for consumers.
According to IHS Energy: “Since U.S. gasoline is priced off global gasoline prices, not domestic crude prices, the reduction will flow back into lower prices at the pump reducing the gasoline price 8 cents a gallon. The savings for motorists is $265 billion over the 2016-2030 period.”
FACT: The U.S. is now the largest oil producer in the world.
According to the U.S. Energy Information Administration (EIA), total U.S. crude production averaged 7.5 million barrels per day (bpd) in 2013, a number that some experts say has grown to over 9 million bpd in 2015. That means the U.S. has now surpassed both Russia and Saudi Arabia as he largest global producer of crude oil and natural gas liquids by volume.
What’s more, numerous studies have indicated that lifting the export ban will encourage a dramatic rise in both investment and production. ICF International reports that “with crude exports, U.S. oil production is expected to grow faster and result in incremental U.S. oil production of between 110,000 – 500,000 barrels per day in 2020.”
FACT: Crude exports will increase our influence abroad, aid our allies, and enhance national security.
Many countries around the world depend on unstable regions and hostile regimes to meet their energy needs. Providing a safe, stable, and reliable alternative to meet global energy demands would be a game changer both for the United States and our allies, and could place more pressure on aggressors like Iran and Russia than any sanctions levied by the international community.
According to General Martin Dempsey, Chairman of the Joint Chiefs of Staff: “An energy independent and net exporter of energy as a nation has the potential to change the security environment around the world – notably in Europe and in the Middle East.”
FACT: Lifting the ban on exports would create jobs and grow the economy.
The domestic oil industry is already a tremendous economic engine for our economy, responsible for almost 10 million jobs nationwide. Lifting the ban on exports would supercharge that impact, adding hundreds of thousands of quality, high-paying jobs around the country. What’s more, the Brookings Institute concluded that the benefits will be “economy wide rather than just industry specific or necessarily new jobs. Rather as the welfare benefits of repealing the ban ripple through the economy, there will be a host of people flocking new employment opportunities.”
In fact, ICF International estimates that “the U.S. economy could gain up to 300,000 jobs in 2020 when crude exports are allowed.” Other studies have indicated that lifting the ban could add as much as 1% to GDP, which would equate to 1 million new jobs created.
PBPA on Crude Oil Exports
May 29, 2015
April 2, 2015
March 11, 2015