Last month, Senators Tammy Baldwin (D-WI), Tammy Duckworth (D-IL), Jack Reed (D-RI), and Jeanne Shaheen (D-NH) sent letters to President Joe Biden to urge limits on exporting crude oil from the United States. Representative Frank Pallone (D-NJ), chair of the House Committee on Energy and Commerce, did the same. Their idea was that reinstating an export ban on US oil will result in lower gasoline prices. Policymakers several years ago likewise considered reinstating an export ban on US oil with the same goal of reducing gasoline prices. But, given the evidence from modeling and simulations, we know now, as we knew years ago, that changing the export regulations on US oil will not have an appreciable effect on reducing gasoline prices for consumers.
Studies in 2015 by Resources for the Future (RFF), the US Energy Information Administration, and National Economic Research Associates all concluded that allowing exports of US oil by removing the export ban—which existed at the time—would not lead to increases in US gasoline prices. In fact, research at the time concluded that allowing US oil exports would be economically beneficial for the United States. In particular, these studies showed that the exports primarily would consist of light oil, for which refinery capacity in the United States is limited. Hence, the United States would be exporting oil to other countries that have refineries which can handle light oils, making the whole system more efficient. For these reasons, and as part of a political agreement that granted tax benefits to wind and solar energy projects, the export ban on US oil was removed at the end of 2015. Since then, US gasoline prices have followed global prices, and the removal of the export ban has not adversely affected US consumers.
US national security has significantly improved, too, if we measure national security as low dependence on foreign oil. Recently, the United States became a net exporter of petroleum and its products. In 2015, the United States imported a net 4.7 million barrels of petroleum and petroleum products per day; in 2022 through April, net exports were 874,000 barrels per day, reversing the oil trade balance. And in the period between 2015 and April 2022, crude oil exports per day increased by 2.77 million barrels. This shift in the oil trade balance has led to increased revenues from oil exports and increased GDP in the United States. Specifically, the projected sum of the oil export revenues and US GDP for 2022 would be $38.2 billion, derived by taking the average Cushing stock price for 396 million barrels of exported oil in the first four months of 2022 and estimating the value for the entire year by multiplying the four months’ worth of stock value by three.
Beyond the United States