Ending restrictions on crude oil exports likely would boost the economy and wouldn’t affect gasoline prices, the head of the Energy Department’s statistics arm said.
Whether to end the 39-year-old virtual ban on crude oil exports is gaining steam in Washington, although politicians are sensitive to pump prices. Even some Republicans who have supported free-trade measures are treading carefully.
But word from U.S. Energy Information Administration chief Adam Sieminski that allowing exports likely wouldn’t influence pump prices and would buoy the economy could lend some new weight to similar claims from the oil industry and recent economic literature on the issue.
“Preliminary evidence suggests that gasoline prices get set in the global markets,” Sieminski, speaking on Platts Energy Week TV, said of two studies the EIA is conducting on oil exports. “There is gasoline imports and exports in very large quantities in the U.S., and global markets seem to dominate that. What that suggests is that exports might not have that much of an impact on gasoline prices.”
What Sieminski means is that gasoline prices are set on global markets, so sending U.S. crude abroad likely wouldn’t change prices at the pump. The U.S. already trades in gasoline, and it and other refined petroleum products, which don’t face the same export restrictions as crude oil, have been a significant driver in reducing the federal trade deficit.
But Americans are split over whether to end the export ban, with many more fearing doing so would raise gasoline prices, according to a Reuters-IPSOS poll released last week. While the poll found that about just as many supported allowing exports as those who opposed them, 68 percent believed exports would raise gasoline prices.
Energy Secretary Ernest Moniz last week attempted to cool some of the talk about lifting the restrictions on the same Platts program, noting that the U.S. is still “a very large importer of oil.”
Sieminski hit back that the U.S. is a “large importer and exporter of lots of things,” suggesting that the U.S. shouldn’t close off crude oil exports just because it’s still importing crude.
Imports are falling fast. The EIA recently noted that the amount of imported oil and petroleum consumed in the U.S. last year hit 32 percent, a drop of 60 percent from 2005. In 2015, imports will comprise 21 percent of U.S. consumption, according to the EIA.
But the administration has been tight-lipped about what it plans to do.
Moniz said he couldn’t say whether a change to export policy was in the offing, though much has been made about a Commerce Department decision in June to grant two companies approval for exports of a lightly processed form of oil called condensate. Some observers viewed that as a weakening of export restrictions, though the Obama administration has refuted that characterization.
Meanwhile, it might not make economic sense for U.S. refiners to convert crude into gasoline or other finished products just to comply with export regulations, Sieminski said.
Echoing the arguments of the oil industry and some refiners, Sieminski noted U.S. refineries are equipped to process heavy sour crude that it imports — not the light sweet crude currently pouring out of shale plays across the country.
“We have a lot of light sweet crude. We have a refining system that’s geared to run heavier sour crude. So exporting some of the stuff that we don’t need and getting in some of the stuff that we do need might be something that is best for the economy,” Sieminski said.
