Lifting the U.S. ban on crude oil exports would result in lower domestic gasoline prices, according to a new report by the Aspen Institute. Capital expenditure in the refining sector, however, would slip by almost $1 billion in 2020. The report underscores the fear among many refiners that an export-driven increase in the price of West Texas Intermediate crude relative to Brent crude would reduce their margins. Moreover, exports of light, sweet crude from U.S. shale plays would reduce refiners’ incentive to upgrade and reconfigure their facilities to process domestic oil more efficiently.
Few expect the crude oil ban to be lifted by the current Congress given the widespread belief that doing so would increase domestic gasoline prices. On the contrary, Aspen’s report argues that gasoline prices would fall slightly as U.S. oil floods the global market. Oil companies would have a greater incentive to produce more in the U.S. as domestic crude fetches more cash from foreign buyers.
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