The U.S. energy market would largely benefit from lifting the current ban on crude oil exports, according to a new report from researchers at Rice University.
Although the study acknowledged that domestic crude prices would increase as a result of ending the ban, Kenneth Medlock, director of the Baker Institute for Public Policy's Center for Energy Studies, argued that move would simply bring U.S. prices more in line with the international market.
“Counterintuitive to some, removing the ban generates distinct energy security benefits,” Medlock said.
Confining crude oil to U.S. refineries, Medlock said, could lead to discounted crude prices that eventually disrupt investment in oil exploration and production.
Moreover, the study found the rapid increase in U.S. fracking activity in recent years produced crudes at a higher quality than both the West Texas Intermediate and Brent crude indexes. Those exports of shale oil from fracking would likely fetch higher prices than the current benchmarks.
Medlock said that previous analyses therefore likely underestimated the effects of fracking on decreased U.S. prices.
Medlock's report also examined the consequences of lifting the export ban on oil prices ranging between $30 per barrel and $150 per barrel. Rice officials said previous studies accounted for narrower ranges and said the report was particularly significant given the collapse in global oil prices in recent months.
In the wake of dramatically higher U.S. production, oil companies called for lawmakers to lift the decades-old crude export ban. In addition to their concerns about unfair pricing, producers questioned whether U.S. refineries could handle the increased levels of U.S. crude.
Refiners, in contrast, reaped the benefits of lower U.S. crude prices and recently commissioned a study indicating they could easily account for new oil production.
Medlock added that lifting the ban wouldn't affect gasoline prices in the U.S. because refined petroleum is not subject to the export ban and therefore already conforms to international norms.