WASHINGTON — A report today from a respected oil historian argues for lifting a long-standing ban on U.S. oil exports in order to keep down gasoline prices for consumers. It’s a view sure to raise eyebrows and comes amid a broader national debate about exporting America’s new energy bounty.
The report by IHS Energy, led by influential author and energy consultant Daniel Yergin, comes as the Obama administration is weighing whether to lift the export ban put in place in the wake of the 1973 Arab oil embargo and during a past era of ill-fated price controls to protect consumers from higher pump prices.
The report, shared with McClatchy before publication, points to the skyrocketing U.S. oil and natural gas production that’s resulted from new drilling techniques shorthanded as fracking. It argues the ban has outlived its purpose.
“You have this relic of an age long gone,” Yergin said in an interview Wednesday. The export ban, by his estimate, makes oil and gasoline more expensive than it otherwise would be. That’s because U.S. refineries are generally configured to handle heavier grades of crude oil. The lighter-grade oil coming from new production areas in Montana and the Dakotas can be sold for more abroad and would add to the international supply, thus potentially lowering global prices.
“The benefit to consumers of a crude oil free-trade policy is an estimated 8 cents per gallon … reduction in the price of gasoline and transportation fuels,” according to the 120-page report.
The report said savings to consumers could be as high as 12 cents a gallon and that U.S. oil exports could reduce world oil prices by $3 to $5 a barrel over a 15-year window. It estimates the broader economy would grow between 0.7 percent and 1.2 percent faster over the period than otherwise would be the case, as a result of the cheaper gasoline prices and additional consumer spending power.
“The benefits of this in terms of investment would flow through to the entire economy in a pretty significant way,” said Yergin, who won the Pulitzer in 1992 for his book “The Prize: The Epic Quest for Oil, Money & Power,” which dissected the history and geopolitics of oil.
The federal Energy Information Administration is now engaged in its own research into the consequences of lifting the export ban in light of U.S. production, which last year rose by 15 percent, the largest single-year gain since 1940.
The IHS study was funded by a group of prominent energy and oilfield service companies including Chevron, ConocoPhillips, Continental Resources, Exxon Mobil and Halliburton.
“Obviously people who don’t like the study will point to that,” Yergin said. “This is our reputation, our work, and this is where our research led us.”
