The U.S. will benefit from increased oil production and lower gasoline prices if the government lifts restrictions on crude exports, according to IHS Inc.
The world’s largest oil consumer may save an average of $67 billion a year from its import bill as domestic output may rise as much as 949,000 barrels a day in 2016 with the removal of the export ban, the Colorado-based consultant said in a report today. Such a scenario would support 964,000 additional jobs in 2018, it predicted.
“Making U.S. oil available to global markets would unlock the current supply and refining gridlock,” IHS said. “It would lead to a total of $746 billion in additional investment during the study period of 2016 to 2030 and an average of 1.2 million barrels per day more oil production per year.”
A 1975 U.S. federal law bans most oil exports, with only shipments of refined products such as gasoline and diesel allowed. The Merchant Marine Act of 1920, known as the Jones Act, also restricts shipments within the U.S. to vessels that are built in the country and crewed by Americans.
Gasoline prices in the U.S. may potentially drop by 8 cents a gallon each year on average if the export ban is lifted, according to IHS. This would translate to $265 billion in savings for U.S. motorists during the 2016 to 2030 period, it said.
“The 1970’s-era policy restricting crude oil exports -- a vestige from a price controls system that ended in 1981 -- is a remnant from another time,” said Daniel Yergin, the vice chairman at IHS. “It doesn’t reflect the dramatic turnaround in domestic oil production, led by tight oil, which has reversed the U.S.’s oil position so significantly.”
The mismatch between rising U.S. oil production from shale and the country’s ability to refine it is driving the debate over whether to lift the ban on crude exports, Energy Secretary Ernest Moniz said earlier this month.
“The driver, or the consideration, is that the nature of oil we’re producing may not be well matched to our current refinery capacity,” Moniz said an industry event in Seoul on May 13. “Bakken in North Dakota and Eagle Ford in Texas shale produce very light oil that is not well-connected by infrastructure to the refineries that can process it.”
U.S. crude inventories rose last month to the highest since the government’s Energy Information Administration began publishing weekly data in 1982. Stockpiles increased to 399.4 million barrels in the week to April 25, according to the EIA.