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US lifts oil export ban — now what?

Q: Will lifting the ban on exporting U.S. crude oil lead to higher prices?

Marney Cox, San Diego Association of Governments

Answer: NO

Lifting the oil export ban would lower, not raise prices in the U.S. First, not all oil is the same. The main reason to export would be to solve mismatches between domestic crude oil quality and the capacity of refineries to handle different grades of crude. Second, fuel prices move in tandem with the world price of crude oil. Removing the ban would not affect the amount consumed in the U.S.

Phil Blair, Manpower

Answer: He is not participating this week.

Kelly Cunningham, National University System

Answer: NO

Prices dropped largely because U.S. production nearly doubled over the past six years. Further increases in U.S. exports on world markets should bring global prices down a bit more. The export ban designed to insulate the U.S. economy from the effects of supply disruptions and other factors affecting prices was and remains fundamentally flawed. Eliminating the ban will create more U.S. jobs and further drive gasoline prices down by encouraging more domestic crude oil production.

Gina Champion-Cain, American National Investments

Answer: She is not participating this week.

Alan Gin, University of San Diego

Answer: NO

The market for oil is a worldwide market where the oil sold is fungible. There is a total global demand and a total global supply, and it doesn’t matter where the transactions occur. Oil exported from the U.S. means less supply for U.S. refineries, but would also put further downward pressure on world oil prices. A bigger factor in terms of oil prices is the weakening global economy in general and the slowing in China in particular, which will keep prices low.

James Hamilton, University of California San Diego

Answer: NO

There is no ban on exports of refined products, which means that U.S. consumers already pay the world price for gasoline. Lifting the ban on crude exports would result in a higher price for U.S. crude producers and a lower markup on gasoline for U.S. refiners. The price of gas to consumers could even go down due to greater efficiencies from getting each refinery its ideal blend of crude, filling tankers both ways with imports and exports, and boosting U.S. crude production.

Jamie Moraga, intelliSolutions

Answer: NO

The export ban was enacted in 1975 in response to the oil embargo by Arab OPEC nations against the U.S. Domestic oil production has doubled over the last six years, which has helped reduce our reliance on imported foreign oil. Lifting the ban could help level the playing field in the global marketplace, create more domestic jobs, and give U.S allies an alternative for crude oil other than Russia and the Middle East. All of which should keep oil prices lower.

Gary London, The London Group Realty Advisors

Answer: NO

Energy exporting could actually lead to lower global energy prices, since they would increase oil supply around the globe. If the U.S. is exporting, it effectively means that we are well supplied and taking care of our domestic energy needs, potentially lowering global demand and impacting downward pressure on prices. If circumstances played out that way, this would exact an economic toll on rogue oil exporting countries like Russia and Iran, which depend on high prices to prop up their totalitarian regimes. Good.

Gail Naughton, Histogen

Answer: She is not participating this week.

Norm Miller, University of San Diego

Answer: NO

A recent analysis by Resources for the Future, a nonpartisan D.C. think tank, argues that lifting the export ban will allow disparate grades of petroleum to reach the refineries that can most efficiently process them, and that this in turn might actually decrease the cost of gasoline. Additionally if prices rise, based on global demand, less efficient shale oil producers will ramp up. At the same time, smart U.S. car buyers are going electric which is mitigating domestic demand.

Austin Neudecker, Rev

Answer: YES

In the short term, it will have almost no impact because of the abundant supply on the world markets. Today, U.S. producers have artificially limited demand. Simply by definition, if U.S. producers can sell to a broader demand base, they will have more potential buyers. Eventually, this could only increase prices to U.S. consumers. The real question is should we lift the ban; I’d say yes, but focus more on funding alternatives.

Bob Rauch, R.A. Rauch and Associates

Answer: NO

Lifting the export ban on oil would allow domestic-energy producers to compete on a level playing field with international exporters. This will contribute to a further increase in international supply, either stabilizing or forcing prices down even more. This will prevent a further slashing of production and jobs here that is caused by the recent drop in prices. Lifting the ban will likely create new jobs at the same time.

Lynn Reaser, Point Loma Nazarene University

Answer: NO

Because U.S. crude oil is largely “trapped” due to the export demand, causing a glut in local markets, prices abroad are higher than domestic crude prices. A lifting of the ban would spur greater domestic production that would bring global prices down towards U.S. prices instead of the reverse. Gasoline prices are set in the world market without these artificial barriers. An increase in crude supplies would also bring lower costs at the pump.

John Sarkisian, SKLZ

Answer: NO

Releasing more oil into the global supply should result in prices decreasing for oil. However, given the amount of oil that might be exported it may not make much, if any, difference in the global price of oil. Many think it might effect the retail price of gasoline in the United States. What they might not understand is the refiner capacity in the US and what oil those refiners can process. Much of the oil in the US is not of the type that can be refined into gas in our country.

Dan Seiver, Reilly Financial Advisors

Answer: YES

But not by much, and it will probably lead to a more efficient allocation for refining the different grades and “sweetness” of different crudes. It will also depress a little further the world price of crude, which will hurt Venezuela, Russia, and Iran. Overall, export bans are bad trade policy, even if they make good politics.

Chris Van Gorder, Scripps Health

Answer: NO

Even if the bill passes, which I believe is unlikely due to presidential veto and Senate opposition, it’s far from certain that prices will rise in the near term. Oil prices have fallen on lower demand, due in part to continued high oil production, particularly by Saudi Arabia. Allowing oil exports would likely help the faltering U.S. energy industry, bring back lost jobs and hold oil prices in check through increased production.

In related news, House OKs lifting 40-year-old US ban on oil exports.

This article was written by Dan McSwain from The San Diego Union-Tribune and was legally licensed through the NewsCred publisher network.