The United States could create nearly a million jobs and lower its domestic energy bills if it ended its crude oil export ban, two reports said on Thursday.
Both the American Petroleum Institute—which represents oil producers—and research firm IHS made the case for the U.S. shipping some of its oil supplies abroad, even as consumers struggle with higher prices at home.
The API study predicted broad-based economic gains if the oil ban were lifted, repeating its assertion that exporting oil would economically benefit not only oil-producing states but other states as well. The restrictions originally came about during the energy crises of the 1970s. (Since then, the Commerce Department has made exceptions for certain types of oil, but they amount to a total of fewer than 100,000 barrels per day in exports, according to data from the Energy Information Administration.)
“There are significant consumer benefits to exporting crude,” Kyle Isakower, API’s vice president for regulatory and economic policy, said on a conference call with reporters. “There is a growing realization that this is a new era for American energy.”
The studies come as America is producing more oil and gas than it has in nearly 40 years, and Congress is weighing legislation that would ease restrictions on exports. However, increased output has yet to result in lower energy prices domestically, as gasoline and natural gas prices have put a strain on consumers nationwide.
The API acknowledged as much on the call, but argued that shipping more U.S. oil abroad would help ease international prices—the primary mechanism by which retail gas prices are set.
The U.S. oil and gas boom “is a huge win for us, but it takes a little education” for drivers to appreciate the economic benefits of flooding global markets with American crude, Isakower said. “The public will get behind crude exports when they see a benefit for themselves.”
In its own study released on Thursday, IHS predicted an end to the nearly four-decade-old restrictions could inject $746 billion in additional investment into the economy between 2016 and 2030, while increasing domestic oil production by an average of 1.2 million barrels more per day.
“The additional crude oil supply would lower gasoline prices by an annual average of 8 cents per gallon,” IHS said. “The combined savings for U.S. motorists during the 2016-2030 period would translate to $265 billion compared to a situation where the restrictive trade policy remains in place.”
A boost to the U.S. economy would be “rapid,” the firm said, accompanied by a surge of capital that could help depress gas prices in the longer term. By removing export restrictions, the U.S. could also lower its own petroleum imports by nearly 1 million b/d in 2016 for a savings of more than $43 billion.
The export ban has become an increasingly hot topic in energy markets, given the aggressive U.S. push toward energy independence. In a report championing its “all of the above” energy strategy, the White House lauded the country’s progress in producing its own supplies—pointing out how the boom has lifted gross domestic product in the last few years.
“Rising domestic energy production has made a significant contribution to GDP growth and job creation,” the White House said.
“The increases in oil and natural gas production alone contributed more than 0.2 percentage points to real GDP growth in both 2012 and 2013, and employment in these sectors increased by 133,000 between 2010 and 2013.These figures do not account for all the economic spillovers, so the overall impact on the economy of this growth in oil and gas production is even greater.”
However, the document sidestepped lifting the crude ban, a politically thorny subject. At the height of the oil shock era of the 1970s, Congress passed two key pieces of legislation that effectively outlawed shipping domestically produced oil to international markets. Although lawmakers’ stated goal was to conserve domestic stockpiles and lessen foreign imports, economists point out that it had the opposite effect.
Until very recently, the world’s largest economy imported the lion’s share of its energy—much of it from hostile petro-state regimes. The U.S. vies with China as the globe’s largest guzzler of oil and gas.
“Removing all proscriptions on crude oil exports, except in extraordinary circumstances, will strengthen the U.S. economy and promote the efficient development of the country’s energy sector,” the Council on Foreign Relations said in a study on the topic last year.
–By CNBC’s Javier E. David.