Export of unrefined oil has been restricted (not quite banned, since there are exceptions, especially recently) since the mid-70s. Oil companies have been lobbying to have these restrictions lifted, and some politicians (usually (R) or from oil producing states AFAICT) are in favor.
A cursory summary, hastily pulled from dark places, of possible for and against arguments follows. We should put on our skeptic hats for all of these, and be ready to both refine these and add more.
Pro
[ol]
[li]Economic Boom. Gas prices won’t rise, and we’ll benefit from the economic activity from increased production.[/li][li]Markets Should be FREE. Don’t tell me what to do.[/li][li]Geopolitical Ramifications. I don’t know enough to say more.[/li][/ol]
Con
[ol]
[li]Economic Bust. If you have problems with EIA’s analysis, or my interpretation of it, you should speak up.[/li][li]Poison the Earth. Hydrocarbon production is environmentally naughty, and exports will lead to increased burning and more CO2 and we’ll all die.[/li][li]Geopolitical Ramifications. I don’t know enough to say more.[/li][/ol]
Some reactions from political types can be found here: http://www.wsj.com/articles/government-report-finds-economic-benefits-of-oil-exports-1441118093
I think that economic arguments point in favor, although keep in mind EIA doesn’t directly address those. Environmental arguments might be the best reason against, if you care about that, but I don’t know how oil export restrictions compare to other options, whatever they may be.
Appendix:
For those confused about why we both import and export, remember that oil comes in different flavors and from different places. Refiners sometimes need a grade that isn’t available locally, or have too much of one that is. And moving a product between countries can be cheaper than moving a product internally, or vice versa, depending on geography.
Sure-why not? markets are much better in determining trade than the dead hand of government. This is the kind of idiocy that distorts markets and confuses pricing.
Allowing American companies to export is always good. Expand markets and you get more business.
Look at this way. Suppose that my humble home state of North Dakota passed a law saying that oil can’t be exported from the state. What effects would this have? Temporarily oil prices would go down within the state since there would be so much oil and the companies weren’t allowed to sell it elsewhere. But in the long term, there would be less production because the producers wouldn’t have much chance to make money.
Same deal for the United States as a whole. Allow exports and the producers have more chance to make money, so they’ll produce more.
As for the national security argument, it’s nonsense. The USA is part of a global market and will be, whether this rule chance goes through or not. If we export oil, that will drive global prices down, and hopefully push OPEC towards a well-deserved collapse, as well as hurting unsavory regimes such as Putin’s Russia.
Exporting crude might make more practical sense than exporting refined products. A barrel yields a bunch of different products, which have to be shipped separately, and some of them are potentially very explosive in a mishap. In addition, the crack can be tailored, somewhat, to adjust the yields of different refined products, which a customer might prefer to do themself. So in terms of moving large quantities around the world, crude looks preferable to refined products.
But this is a national resource. Much of it is even extracted from public land, so it really belongs to everyone, yet most of the revenue (profit) ends up in the hands of just a few people. In terms of the social and environmental cost, the economic advantage does not justify it.
If the market does not support extraction of the oil, it will stay in the ground. If we know where it is, it will be there when we need it. Oil does not get all moldy if we leave it down there.
I’ve long been on the side of “not much will happen”. If the US was producing enough crude for its own domestic use and then some, the export restrictions would mean that the price of crude in US would be lower than the rest of the world (because in-US supply would exceed in-US demand, and that could not be corrected by trade due to the regulation). One might then rightly say that changing the regulation to allow export would raise (domestic US) prices.
But even if the US kept 100% of its domestically-extracted crude in-country, it would still have to import more to meet domestic demand. US prices are connected to the rest of the world’s prices and all the export restriction does is change the specific ways that demand and supply are matched up.
Then I guess we don’t need the Keystone Pipeline. If it all gets exported, we see no benefit in our market, and it doesn’t reduce our dependence on foreign oil. Glad to hear you are on board.
I would expect his argument to align with not interfering with trade here, i.e. allowing the pipeline to proceed. But I’m putting words in another poster’s…keyboard.
Well, since there are many legitimate objections from land owners, farmers and Native Americans, I think enriching oil companies should be justified with a better reason than that. At least before, there was the conservative fig leaf of lowering gasoline prices and easing dependence on foreign oil (even though most of it was destined for export anyway). But now that we have it from ralph124c that it should all be exported if the market deems it so, there is no remaining justification, beside enriching the management and stockholders of oil companies.
I wouldn’t say none of it. Reducing dependence on foreign oil has been the justification for the ban on oil exports for decades. I was responding to ralph124c’s statement that the market should decide, not the government. The two positions cannot coexist.
I think they can. ralph124c seems to think that the government should exist in a bubble, wholly separate from the actions of the market. I fail to see how this can be. Not only are government operations affected by the market (e.g., the price of asphalt, textbooks and jet fuel), but the authorizers/charges of the government (everyone) are affected by the government. Which is to say that the government has a significant stake in the market: it is a player. To say “let the markets, not the government decide” is disingenuous and oxymoronic.
The whole energy security rationale also doesn’t really apply anymore so much. The whole idea was that if the US exported too much oil, we wouldn’t have enough left in the ground to ramp up domestic production in the case of a war or an embargo or whatever.
With the unconventional reservoirs that have been driving the recent North American boom, the amount of theoretically recoverable oil is enormous. The limiting factor is the infrastructure to develop it, which generally depends on the economics being such that it can be profitably extracted. In terms of the US’s ability to respond to a crisis, these days we’d be much better off fostering policies that will lead to a functional domestic petroleum industry, and allowing exports would be a big step in that direction.
The environmental and other issues are still very much up for debate, but the energy security one that originally spurred the export ban is pretty much obsolete.
You have econometric studies to back this up, right?
I mean, in this case, I share your bias, but I don’t accept this as a general principle just because of some argument from the authority of the divine Adam Smith.
To be clear: Since the USA is a hydrocarbon extractor, it does make some sense to put our oil on the world market, same as the Canucks do.
On the other hand, we do an awful lot of coal/petroleum/gas extraction already. Given the present controversies over fracking and anthropogenic climate change–and more nationalistically, an understanding that our hydrocarbons will be worth more in the future when Canada & Norway have spent their fields–I’m not really that inclined to encourage Chevron and Exxon to drill even more than they will under present law. I don’t expect to lose a lot of sleep over leaving laws like this in place.
The producers of this oil/liquid asphalt are willing to sell, their buys want to buy it. How does stopping this enterprise benefit anybody? It could be argued that the exploitation of marginal oil supplies will bring the era of renewable energy closer, by providing the capital necessary.
We have the necessary capital already, what’s needed now is the incentive to transition. The energy companies need to be shown more sticks and fewer carrots at this point in time.
