Thomas Catenacci on May 25, 2022
- The Biden administration appeared to reverse its previous position that it wouldn’t consider an oil export ban Tuesday.
- “I can confirm the president is not taking any tools off the table,” Energy Secretary Jennifer Granholm remarked, Reuters reported.
- “If you had a ban on crude oil exports, because you’re cutting off supply to the global market, you are going to have higher global crude prices and higher global refined product prices that would be fed through here,” said Garrett Golding, a business economist tasked with analyzing energy markets at the Federal Reserve Bank of Dallas.
Energy Secretary Jennifer Granholm said the administration hasn’t ruled out a petroleum export ban Tuesday, an apparent reversal of its previous position on the policy.
Granholm’s comments appeared to suggest President Joe Biden was open to both an oil export ban and export ban on refined products like gasoline or diesel fuel. The energy secretary promised in December that a crude oil export ban was off the table during a meeting with oil industry officials, adding that she didn’t “want to fight” with domestic energy producers.
“I can confirm the president is not taking any tools off the table,” Granholm remarked Tuesday during a visit to Louisiana, Reuters reported.
However, market analyses of the 1975 federal oil export ban, which was repealed in 2015, suggested the policy had a negligible impact on prices and, sometimes, led to higher domestic energy prices. Allowing oil exports incentivizes domestic production, ensures global market stability and boosts the U.S. economy, according to multiple studies.
“Petroleum product prices in the United States, including gasoline prices, would be either unchanged or slightly reduced by the removal of current restrictions on crude oil exports,” the Energy Information Administration (EIA) concluded in a 2015 report.
A crude oil export doesn’t impact prices of refined products like gasoline or diesel fuel since they are traded on the international market, according to the Center for Energy Studies at Rice University’s Baker Institute for Public Policy. The 1975-2015 oil export ban didn’t apply to refined products.
In addition, American refineries have a limited capacity for processing the lighter crude oil type that is mainly drilled in the U.S., forcing lower domestic production if excess crude cannot be shipped overseas.
“That’s what led to us allowing crude oil exports to begin with in 2015 — the fact that we were going to run out of refining capacity for the type of crude oil that’s produced in the U.S.,” Garrett Golding, a business economist tasked with analyzing energy markets at the Federal Reserve Bank of Dallas, told The Daily Caller News Foundation in an interview.
“That relief valve for U.S. crude production is what allowed it to keep growing,” he said, adding that it would require billions of dollars and take years to upgrade domestic refineries.
Golding and fellow Dallas Fed economist Lutz Kilian published a paper in January that argued an oil export ban would not lower gasoline prices for consumers. They argued that limiting exports would increase international refined product prices which determine U.S. gasoline and diesel prices.
Golding and Kilian added that an export ban would increase U.S. reliance on foreign oil and increase the nation’s trade deficit.
“If you had a ban on crude oil exports, because you’re cutting off supply to the global market, you are going to have higher global crude prices and higher global refined product prices that would be fed through here,” Golding continued.
The U.S. imported 6.2 million barrels of crude oil a day and exported 3.3 million barrels a day in February, the latest month with data, according to the EIA. The majority of the imports derived from Canada which mainly exports bitumen, a heavier crude type.
Senate Democrats led by Massachusetts Sen. Ed Markey, meanwhile, have urged the Biden administration to implement a crude oil export ban in November and introduced a bill in April 2021 that would mandate the policy. The lawmakers argued such a ban would protect American consumers and prevent climate change by taking fossil fuels off the global market.
Democratic Oregon Sen. Ron Wyden, who co-sponsored the Block All New Oil Exports Act, said the U.S. exports and imports millions of barrels of oil per day, perpetuating “a merry-go-round of oil dependence.”
The White House and Department of Energy didn’t immediately respond to requests for comment from TheDCNF.
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