Assessing the impact of the export ban and free trade on the US economy
Lifting Export Restrictions on US Crude Oil Would Lower Gasoline Prices and Reduce US Petroleum Imports While Supporting Up to 964,000 Additional Jobs.
Lifting the 1970s-era restrictions on US crude oil exports would lead to further increases in domestic oil production, resulting in lower gasoline prices while supporting nearly 1 million additional jobs at the peak.
Doing away with exports restrictions would also generate added benefits to US household income, gross domestic product (GDP) and government revenues.
The US oil system is nearing “Gridlock” with the mismatch between the rapid growth of light tight oil and the inability of the US refining system to economically process these growing volumes. Lifting the export ban and allowing free trade will, in our base case, increase US production—from 8.2 million B/D currently to 11.2 million B/D—and add investment of nearly $750 billion. The resulting increase in domestic oil production would be so great that it would cut the US oil import bill by an average of $67 billion per year.
The assumption that allowing crude oil exports would result in higher gasoline prices for consumers is not accurate. US gasoline, unlike crude oil, is part of a globally-traded gasoline market, meaning that US prices at the pump reflect global prices. At present, the current policy is discouraging additional crude oil supplies from being brought to market, which actually makes gasoline prices higher than they otherwise would be.
The additional crude oil supply that would be generated if exports restrictions were removed would lower gasoline prices by an annual average of 8 cents per gallon. The combined savings for US motorists during the 2016-2030 period would translate to $265 billion compared to a situation where the restrictive trade policy remains in place.
The increased economic activity resulting from the rise in crude production would support an average of 394,000 additional US jobs over the 2016-2030 period, with highs of 811,000 additional jobs supported in 2017 and a peak of 964,000 jobs in 2018. The average disposable income per household would increase by an additional $391 in 2018 as benefits from increased investment, additional jobs and lower gasoline prices are passed along to consumers.
Lifting the ban supports economic activity across all states. A quarter of the additional jobs are in states that essentially produce no crude oil.