What GAO found
GAO’s analysis of U.S. Energy Information Administration (EIA) data and interviews with industry stakeholders show that the repeal of the U.S. export ban on crude oil is associated with a increase in crude oil exports – from less than half a million barrels per day in 2015 to nearly 3 million barrels per day in 2019. The repeal of the ban has expanded the US crude oil market to foreign buyers and, along with other market factors, allowed US crude oil producers to charge higher prices compared to comparable foreign crude oil. Higher prices and a larger market for US crude oil further boosted domestic crude oil production, which had increased since the shale oil boom began around 2009 (see figure). In the post-repeal period, total US crude oil imports remained largely unchanged.
Annual U.S. crude oil production and exports, 2009-2019
GAO’s analysis revealed limited effects associated with the repeal of the ban on the production, export and import of domestic refined petroleum products, such as gasoline. However, profit margins – which are determined in part by the costs a refiner pays for crude oil and the revenues a refiner earns from the sale of refined products – have likely declined as prices paid by refiners. for domestic crude oil have increased relative to international prices. With gasoline prices largely determined in the world market, US refiners have been unable to pass on to consumers the additional costs associated with rising crude oil prices, resulting in declining refiners’ profit margins. Americans.
Finally, after the ban on the export of crude oil was repealed, the US shipping industry saw a decline, the demand for US tankers, known as the Jones Act tankers, used to transport domestic crude oil. between US ports. The increase in the relative price of domestic crude oils associated with the repeal of the export ban may have caused some US refineries to decide to use more foreign crude oil. Foreign crude oil is typically transported by foreign tankers, reducing the demand for the Jones Act tankers from what it would have been if the export ban had remained in place, according to six of the seven players in the shipping industry surveyed by GAO.
Why GAO did this study
Between 1975 and the end of 2015, the Energy Policy and Conservation Act banned almost all exports of U.S. crude oil. This ban was not seen as an important political issue when US oil production declined and import volumes increased. However, crude oil production in the United States nearly doubled from 2009 to 2015, in part due to a boom in shale oil production made possible by advances in drilling technology. In December 2015, Congress effectively repealed the ban, allowing the free export of U.S. crude oil around the world.
GAO has been asked to provide information on the effects of repealing the export ban on crude oil. This report describes the effects of the repeal of the export ban on crude oil on domestic crude oil production, petroleum refining and related sectors of the US marine industry.
GAO analyzed data from the EIA and other federal databases to determine the effects of repealing the export ban. GAO also interviewed a non-generalizable sample of economists, market analysts, and stakeholders in the oil and gas, refining, and shipping industries. GAO’s analysis focused on the repeal of the crude oil export ban and the effects of the repeal on U.S. crude oil and related industries through March 2020.
For more information, contact Frank Rusco at (202) 512-3841 or [email protected]