|
Oil exports could reduce fuel costs But the lifting of the export ban would also cause the price of US oil to rise and increases US environmental risks, GAO says Alan Bailey Petroleum News
The GAO, or Government Accountability Office, has published the results of a study into the implications of lifting restrictions on the export of crude oil from the United States. The study reached the apparently contradictory conclusion that, while the removal of the export ban would cause the price of U.S. crude oil to rise, the ban removal would also cause a drop in fuel prices for U.S. consumers.
The GAO conducted its study by reviewing four studies on crude oil exports, including two sponsored by industry, and by seeking the views of a variety of stakeholders, including experts from academia and industry.
Response to embargo The U.S. introduced restrictions on the export of domestic crude oil almost 40 years ago in response to an Arab oil embargo and the economic recession that the embargo triggered. But with a recent rapid growth in U.S. oil production, net oil imports have dropped from about 60 percent of U.S. oil consumption in 2005 to 30 percent of consumption during the first five months of 2014, the GAO says. And net imports are expected to remain well below 2005 levels in the future, the agency says.
With U.S. oil prices tending to be a few dollars lower than international prices, the entry of U.S. oil production into the international market would likely raise U.S. domestic oil prices by about $2 to $8, the GAO says. But the consequent changes in the international oil market would probably bring international crude oil prices down, reducing international fuel prices and hence reducing U.S. prices for fuels such as gasoline and diesel, the agency says.
However, the GAO cautioned that some stakeholders have pointed out that uncertainties over the extent of U.S. oil production increases, uncertainties over the ability of U.S. refineries to absorb these increases; and uncertainties over the possible response of the global crude market to U.S. exports all lead to corresponding uncertainties in assessing the impacts of oil exports.
Heightened U.S. oil prices as a result of exporting oil could increase domestic oil production by 130,000 barrels per day to 3.3 million barrels per day over the years 2015 to 2035, the GAO suggests. And the resulting increased economic activity would enlarge the U.S. economy. But the additional crude oil production could also pose risks to environmental factors, such as the quality and quantity of groundwater, the emission of greenhouse gases and the impacts of oil spills, the agency cautioned.
Strategic petroleum reserve The GAO also commented on the implications for the U.S. strategic petroleum reserve of increased U.S. oil production - the reserve, a stockpile of stored crude oil, was established at the same time as export restrictions were introduced, to act as a buffer against oil supply disruption.
But times have changed. In May 2014 the reserve held a 106-day supply, coupled with private industry reserves of 114 days. These reserves were much higher than the levels of 90 days of net imports required by the International Energy Agency, the GAO pointed out. The GAO recommends that the Department of Energy should re-examine the petroleum reserves needs, with the possibility of selling any reserves that exceed requirements.
Sen. Lisa Murkowski, ranking member of the U.S. Senate Committee on Energy and Natural resources, welcomed the GAO report.
“Removing export restrictions are expected to increase the size of the economy, with implications for employment, investment, public revenue, and trade,” Murkowski said. “For example, removing restrictions is expected to contribute to further declines in net crude oil imports, reducing the U.S. trade deficit.”
|
