Posted on 09/10/2014 5:20:25 AM PDT by thackney
The skyrocketing growth of unconventional oil and natural gas production in the United States has ignited an intense debate on the impact of energy exports on U.S. energy and economic security and its foreign policy. In “Changing Markets: Economic Opportunities from Lifting the U.S. Ban on Crude Oil Exports,” Charles Ebinger and Heather Greenley worked with National Economic Research Associates (NERA) to examine the economic and national security impacts of lifting the ban on crude oil exports. Learn eights facts about U.S. crude oil production within the key findings outlined below, and download the full report.
U.S. Economic Benefits
Key Finding: Lifting the ban on crude oil exports from the United States will boost U.S. economic growth, wages, employment, trade and overall welfare. For example, present discounted value of gross domestic product (GDP) in the high oil and gas resource (HOGR) case through 2039 is between $600 billion and $1.8 trillion, depending on how soon and how completely the ban is lifted.
Fact 1. In all three cases — delaying lifting the ban until 2015, lifting the ban only on condensates or lifting the ban entirely — there are positive percentage change impacts on GDP throughout the model horizon.
Fact 2. In the reference case lifting the ban entirely in 2015 will result in a 0.14 percent change in welfare compared to 0.05 percent if lifting the ban were delayed to 2020.
Fact 3. Lifting the ban by 2015 reduces unemployment at an average annual reduction of 200,000 from 2015 – 2020 according to the reference case. U.S. Crude Oil Production
Key Finding: Benefits are greatest if the U.S. lifts the ban in 2015 for all types of crude. Delaying or allowing only condensate exports lowers benefits by 60 percent relative to a complete and immediate removal of the ban. If oil and gas supplies are more abundant than expected, allowing only condensate exports lowers the benefits by 75 percent relative to completely lifting the ban. The chief reason for this is that the greatest increase in light tight oil (LTO) production comes in 2015. Therefore a delay would forego significant benefits. In addition, according to the U.S. Energy Information Administration (EIA) data, the volume of condensate is smaller than LTO and it is discounted less comparatively so exempting it entirely adds fewer benefits than removing the ban on all crude oil.
Fact 4. Petroleum Administration for Defense District (PADD) 3, otherwise known as the Gulf Coast, could in the HOGR case produce an additional 1.5 million barrels per day (mbd) in 2015 if the ban was lifted. Gasoline Prices
Key Finding: Lifting the ban actually lowers gasoline prices by increasing the total amount of crude supply. In the reference case, the decrease in gasoline price is estimated to be $0.09 per gallon in 2015. If oil supplies are more abundant than currently expected, the decline in gasoline prices will be larger ($0.07 to $0.12 per gallon) and will continue throughout the model horizon (2015 – 2035).
Fact 5. U.S. gas prices could decline by $0.09 per gallon in 2015 if the ban is lifted entirely. OPEC Reaction
Key Finding: It is unlikely that U.S. oil exports will be a major calculus in the Organization of the Petroleum Exporting Countries' (OPEC) behavior.
Fact 6. In the HOGR case, the U.S. would be able to increase exports by 2.8 mbd in 2015 and 5.7 mbd in 2035 if OPEC decides to maintain the price of oil and cut crude exports.
U.S. Foreign Policy and Energy Security
Key Finding: Permitting the export of crude oil will enhance U.S. global power in several ways, including: reinforcing the credibility of U.S. free and open market advocacy; allowing for the establishment of secure supply relationships between American producers and foreign consumers; increasing flexibility to export crude to others to address supply disruptions; empowering another non-OPEC nation to meet the growing energy demands from countries in Asia, as well as other rapidly developing nations; shifting oil rents to the U.S. from less reliable suppliers; and providing our own hemisphere with a competitive source of crude supply. Most importantly, allowing crude oil exports will increase revenues to domestic producers helping to maximize the scope of the production boom, boosting American economic power that undergirds U.S. national power and global influence.
Fact 7. Removing oil export constraints will enhance U.S. energy security.
Fact 8. The U.S. will be judged by the example it sets as a market actor.
In summation, increasing crude oil exports in any fashion will have positive economic effects both in the United States and in the world oil market. At the same time, world energy security will be enhanced by increasing the diversification of oil supply available globally, while also increasing U.S. energy security. Lifting the ban generates paramount foreign policy benefits, increases U.S. GDP and welfare and reduces unemployment. It is time the United States commits to its position on free trade markets as a true member of the Organization for Economic Cooperation and Development and global community and allows U.S. crude oil to flow.
Changing Markets: Economic Opportunities from Lifting the U.S. Ban on Crude Oil Exports
http://www.brookings.edu/~/media/research/files/reports/2014/09/09-8-facts-about-crude-oil-production/crude-oil-exports-web.pdf
65 pages, 1.8 MB
All that is well and good, but there is still something that resounds throughout the populace: keep American crude oil for American refineries, for American consumption. Excess over domestic need/demand should be available for export.
Granted, the current wholly contrived market (due to fedgov intervention and regulation) is nothing but an impediment to production and delivery of petroleum products at all levels. As an exercise in the failures of government market regulation and control it would be difficult to find a better example than crude oil production, refining and delivery.
So, if exporting is that good, how much better will the Keystone pipeline be?
We have spent billions upgrading our own refineries for many to run on cheaper, heavy oil.
Importing cheap oil while exporting expensive light oil makes sense, both for American jobs and our trade balance.
Excess over domestic need/demand should be available for export.
We already import more oil than we use and export the surplus refined product.
the current wholly contrived market (due to fedgov intervention and regulation) is nothing but an impediment to production and delivery of petroleum products at all levels.
Yes, that is a good description of the oil export ban. What conservative principles are upheld by wanting the government telling private mineral owners and publicly traded companies who they are allowed to sell their product to?
Removing impediments to supply and demand markets helps. With Venezuela’s falling production, additional supply of nearby heavy (cheaper than light) oil will benefit US and Canada.
Free Markets for a Free Republic
Free Market
Arabs still calling the shots on oil price.
needed
more electric cars
Only while they are willing to hold back production while the rest of us produce as much as we can.
Nothing wrong with a coal powered car, as long as it is not subsidized by tax payers.
More Natural Gas fueled vehicles/ships/locomotives helps as well.
Find me an electric car that can run more than 100 miles without charge, can charge fully in less than 5 minutes, and it’s batterries won’t die immediately in the extreme cold, and doesn’t require a government subsidy to exist; then I’ll think about it.
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