Lifting the restrictions on U.S. crude oil exports would lead to further increases in domestic oil production, result in lower gasoline prices and support millions of additional jobs, according to a comprehensive new study commissioned by the Energy Security Initiative (ESI) at Brookings in coordination with a macroeconomic study contracted from National Economic Research Associates (NERA) Economic Consulting.
The production boom from shale plays across the country, such as North Dakota and Texas, have sparked serious debate on what we should do with our new energy reality of abundant crude oil supply. To shed light on how our Administration should move forward with this new abundant energy source, the ESI partnered with the National Economic Research Associates (NERA) to examine the economic and national security impacts of lifting the ban on crude oil exports. And their findings were clear: it is time to match our policies to our current energy landscape.
Economically, the study found that lifting the ban on crude oil exports from the United States will boost economic growth, wages, employment, trade and overall welfare. Each scenario used in the study model – delaying lifting the ban until 2015, lifting the ban only on condensates or lifting the ban entirely – showed that our GDP was positively affected. Specifically, cumulative GDP increases through 2039 ranged between $600 billion and $1.8 trillion, depending on how soon and how completely the ban is lifted. Additionally, employment impacts – economy wide – are estimated to be positive as well. The study found that lifting the ban entirely by 2015 reduces unemployment at an average annual reduction of 200,000 from 2015 – 2020.
For consumers, the study also found that lifting the ban would actually lower gasoline prices. In the reference case, the decrease in gasoline price is estimated to be $0.09 per gallon in 2015. If oil supplies are more abundant than currently expected, the decline in gasoline prices will be larger ($0.07 to $0.12 per gallon) and will continue throughout the model horizon (2015 – 2035).
Finally, ESI found that not only would lifting the ban help the U.S. economy and consumers, but also strengthen U.S. foreign policy and energy security. According to the ESI reports authors, Charles K. Ebinger and Heather Greenley, “allowing crude oil exports will increase revenues to domestic producers helping to maximize the scope of the production boom, boosting American economic power that undergirds U.S. national power and global influence.”
Furthermore, during a report rollout held yesterday at Brookings, Dr. Larry Summers, former director of the National Economic Council for the Obama Administration, encouraged President Obama to use his executive authority to lift the ban on crude oil exports stating that the export ban “goes against U.S. principles of free trade” and lifting the ban, “is the right thing to do.”
