Effects of Removing Restrictions on U.S. Crude Oil Exports
September 11, 2015
The dramatic increase in U.S. oil production in the past decade has increased pressure to remove current restrictions on U.S. crude oil exports. In 2011, the U.S. produced 5.6 million barrels per day. In 2014, oil production reached 8.7 million barrels per day. Current oil export policies restrict but do not ban crude oil exports. These policies allow exports of API 50 or more as long as it has been processed through a distillation tower.
A recent study by the Energy Information Administration (EIA) found that:
- The impact of removing crude oil exports is dependent on the level of future domestic production.
- The amount of future domestic production is dependent upon future crude oil prices, resulting in a cyclical relationship.
- Removing current restrictions would increase wellhead prices for producers, resulting in additional production.
- There would likely be either a slight reduction or no change the price of petroleum products in the United States if restrictions were removed.
- Exports of crude oil and petroleum are influenced by the economy, efficiency policies and petroleum product prices, not on the level of U.S. crude oil production.
However, as policy makers consider removing these restrictions, it is important to remember that other factors unrelated to U.S. crude oil export policy will also affect the growth of crude oil production. Other countries actions also influence whether global crude prices remain at the current lever, increase or decrease.
Source: John Conti et al., "Effects of Removing Restrictions on U.S. Crude Oil Exports," Cato Institute. September 1, 2015.
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