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Crude Oil Exports
8 things you should know about crude oil exports.
Crude oil produced in the U.S. could not be exported prior to December 2015 when Congress lifted the ban on U.S. crude oil exports as part of the Consolidated Appropriations Act, 2016.
ConocoPhillips sold the first crude oil for export on a tanker that left the port of Corpus Christi, Texas, December 31, 2015.
The original ban was passed in 1975 in response to the Arab oil embargo which had sent the price of oil soaring.
But concerns about whether the U.S. has enough oil and natural gas are a thing of the past. Technological advances in drilling have drastically altered the energy landscape, and what was once considered a dwindling resource is now available in abundance in the United States. Since 2008, U.S. oil production has increased by 73% and is expected to double again by 2040. The U.S. is now the biggest oil producer in the world, surpassing Saudi Arabia and Russia.
Lifting the ban is good for the economy.
According to numerous studies including the Brookings Institution, the Aspen Institute, IHS Energy, ICF International, and the Government Accountability Office (GAO). Nearly 90 percent of economists surveyed by the Associated Press said exporting oil and gas would help the U.S. economy.
Oil exports are likely to help consumers save at the gasoline pump.
Gasoline prices are based on global crude oil prices so an increase in global energy supply caused by the influx of U.S. crude into the market will cause a decrease in consumer fuel prices. IHS Energy predicts that consumers will save $265 billion in lower fuel prices between 2016 and 2030 if exports are allowed.
Lifting the ban on U.S. crude oil exports will help protect and create jobs.
U.S. jobs are predicted to increase by an average of 394,000 per year at a minimum. Peak job creation is estimated to occur in 2018 and will result in a minimum of about 1 million jobs in the U.S. Every new oil production job creates three jobs in the supply chain and another six jobs in the broader economy, according to research by IHS.
Crude oil exports are predicted to grow the U.S. economy.
Crude oil exports are predicted to grow the U.S. economy. Export sales of crude oil should stimulate demand for domestic production, thus increasing the economic investment here. IHS research predicts U.S. GDP could increase on average by $86 to $170 billion annually between 2016 and 2030 and government revenue could increase by $1.3 trillion annually.
Not all oil is the same.
The bulk of the oil produced in the United States is low-density “light oil,” but many Gulf Coast and Midwest refineries were designed to process denser “heavy oil” from Venezuela, Mexico and Canada. This is why experts agree the United States should export light oil, even though it will still need to import heavy oil. So while heavier crude may still need to be imported, allowing exports of light oil will provide the U.S. with additional global trading partners in places where that crude can be refined and used.
The abundance of U.S. crude oil coupled with an ability to export it will change the face of global geopolitics.
Removing the ban on crude exports will strengthen U.S. geopolitical standing around the world, decreasing the likelihood that oil supply will be used as a bargaining chip. Stronger relationships with trade partners will ensure more allies during times of international uncertainty, providing secure supply and minimizing the impact of global geopolitics.