Enviros Oppose Oil Export Ban Because It Would Raise Gasoline Prices


The environmentalists over at the Center For American Progress have a new report out that opposes ending the oil-export ban:

The decline in profits is also why the American Petroleum Institute, Exxon Mobil, and other oil companies are lobbying to lift the crude oil export ban, which would enable them to sell their domestic oil at the world, or Brent, price that fetched nearly $10 per barrel more than the domestic, or West Texas Intermediate, price on February 7. Lifting the ban would force the United States to import more expensive foreign oil to replace the exported domestic oil, which could raise gasoline prices. Banking giant Barclays Plc predicts that lifting the current ban could add $10 billion annually to gasoline prices paid at the pump.

If there is any good news here for American families and businesses, it is that gasoline prices, which hit a record high in 2012, were lower in 2013. This cut at the pump reduced the average household’s annual gasoline expenditures.

For historical reasons, the United States does not allow (most, there are a few exceptions) companies who produce oil to export it to other countries. This law has been in place since 1975 due to long running national security concerns over “energy security.” There has been some movement from lawmakers recently to get rid of this ban because the United States has significantly increased its domestic oil production and refineries (which turn the oil into gasoline, etc.) aren’t particularly well equipped to handle the recent increase in light crude oil production.

The United States does permit companies to export gasoline, which is one of the main byproducts of crude oil. This would seem to defeat the purpose of the ban as companies can simply convert oil to gasoline and then export it overseas. It would be more efficient for world markets if the United States were allowed to export oil that it isn’t particularly well equipped to refine, while importing oil which its refineries are more suited to handle.

Enter the Center for American Progress. The irony here is that CAP is opposing the export ban on the grounds that it will increase domestic gasoline prices. Most of the activists at CAP would love to see gasoline prices rise because it would cause individuals to use less gasoline, which they support because they are very worried about global warming. Yet here they are arguing against something because it would increase gasoline prices. You can’t have it both ways.

Additionally, CAP seems a bit confused as to whether or not the profits of the “big oil” companies are outrageously lavish or unsustainable. Compare and contrast:

The 2013 profit totals are in for the big five oil companies—BP, Chevron, ConocoPhillips, Exxon Mobil, and Shell. Their financial reports indicate that they earned a combined total of $93 billion last year, or $177,000 per minute. (see Table 1) After years of oil production declines, the big five oil companies actually increased their total production* in 2013, predominately due to BP and ConocoPhillips almost doubling their total production. The companies’ higher oil production yet lower profits indicate that it is becoming more expensive to produce oil as the number of newer, easier, and cheaper fields shrink.


The fact that profits decreased in 2013 despite production increasing calls into question the big five companies’ reliance on finding and developing more difficult, dangerous oil fields—such as those in the Arctic Ocean. It is fairly clear that such a business model is not economically sustainable. Instead, they—and we—could benefit from greater investment in cleaner, alternative transportation technologies.

I’m pretty sure the world will continue using oil for a long time. And companies will continue making money by digging it out of the ground, despite their please.


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