The long-standing ban on selling American crude oil overseas is aggravating the effects of the oil-price collapse to jeopardize the U.S. energy boom, influential energy historian Daniel Yergin argues in a new report that will be closely read as the industry pushes Congress to remove the ban.
The report, being released Tuesday by IHS Energy, a consulting firm led by Yergin, also maintains that dropping the ban on oil exports will help the entire energy supply chain, from construction to banking, with Texas and California getting the most benefit and even states – such as Florida and Washington – that aren’t significant petroleum producers enjoying spinoff effects.
“Continued growth in the oil and gas industry and in the supply chain supporting it could be imperiled by low prices and outdated crude-oil export policies that restrain market access and hinder future investment and production,” the report says.
The IHS study was funded by energy and oilfield-service companies including Chevron, ConocoPhillips, Continental Resources, Exxon Mobil and Halliburton. The industry is pushing hard for Congress to lift the export ban, which was imposed in the wake of the 1970s Arab oil embargo with the idea of protecting consumers from higher gasoline prices.
The industry argues that the ban is a relic of failed price-control efforts and is especially outdated now that the United States is an oil superpower, drilling so much that it helped create a global glut that sent prices crashing.
“While low prices are the primary challenge facing the industry in 2015, the ban on exports of U.S. crude-oil production will hinder or even cut short any recovery tomorrow,” according to the IHS report.
U.S. oil producers could make more money by selling abroad. The international benchmark price of oil is averaging $7 to $12 a barrel higher than the domestic price for American crude oil.