Crude Oil Exports – 7 things you should know about crude oil exports.

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April 29, 2015
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Crude Oil Exports – 7 things you should know about crude oil exports.

Article provided by ConocoPhillips

1. There is currently a ban on the export of U.S. crude oil.

Congress banned crude oil exports in 1975 in response to the Arab oil embargo which sent the price of oil soaring in 1973. The purpose of the ban was to ensure there was enough energy available for American consumers. While crude oil cannot be exported from the lower 48 states or Hawaii, the ban against exporting Alaska North Slope Crude was lifted in 1996. Additionally, there are currently no restrictions on the export of gasoline, diesel or jet fuel; therefore oil products that are produced in the US are already leaving the country.

2. Concerns about the ability of the U.S. to produce 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. America’s oil resources are currently producing about 7.9 million barrels per day, which is the highest annual average since 1988. The U.S. Energy Information Administration (EIA) estimates that U.S. total crude oil production averaged 7.5 million barrels per day in 2013, an increase of 950,000 barrels per day from the previous year, driven largely by growth in tight oil production.

3. The ban on U.S. exports should be lifted.

Lifting the ban on U.S. crude oil exports would create direct and indirect jobs by encouraging more exploration and production, lowering gasoline prices and strengthening U.S. geopolitical standing. Numerous studies support these impacts, including the Brookings Institution, the Aspen Institute, IHS Energy, ICF International, and the Government Accountability Office (GAO).

4. The increasing glut of U.S. crude will soon be more than what U.S. refineries can handle.

Many U.S. refineries are built to process heavy types of crude, not configured to handle the light oil that is currently being produced. Allowing exports will provide the U.S. with additional markets where that crude can be refined and used.

5. Exporting U.S. crude oil is good for consumers.

Increased exploration and production will stimulate the economy and provide consumers with additional disposable income. Gasoline prices are based on global, refined oil product 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. Nearly 90% of economists surveyed by the Associated Press said exporting oil and gas would help the U.S. economy.

6. Lifting the ban on U.S. crude oil exports would protect and create jobs.

U.S. jobs will 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 1 million jobs in the U.S. According to an IHS study, “Benefits from free trade of crude oil are distributed throughout the U.S. Jobs growth and economic benefits are continent-wide and not just in large oil producing states due to substantial supply chains supporting the field production, capital spending, transportation, and refining of crude oil. For example, 24% of the future jobs supporting the oil industry are located in states that essentially produce no crude oil.”

7. 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. The European Union (EU) “remains heavily dependent on imported oil …” from the Middle East, Africa and Russia, according to the Washington Post. This is why the “EU is pressing the United States to lift its longstanding ban on crude oil exports through a sweeping trade and investment deal, according to a secret document from the negotiations obtained by The Washington Post.”

A National Security Strategy assessment recently published by the White House states: “America’s energy revival is not only good for growth, it offers new buffers against the coercive use of energy by some… The challenges faced by Ukrainian and European dependence on Russian energy supplies puts a spotlight on the need for an expanded view of energy security that recognizes the collective needs of the United States, our allies, and trading partners as well as the importance of competitive energy markets.”

Repealing the ban on crude oil exports would provide our trading partners with a stable and reliable source of crude oil, while enhancing America’s energy security and promote domestic economic investment and job creation. Stronger relationships with trade partners will ensure more allies during times of international uncertainty, providing secure supply and minimizing the impact of global geopolitics.

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