As support grows to remove the 1970s era ban on U.S. crude oil exports, some have asked what would actually happen if the ban was repealed. It’s a fair question. While this issue has been studied from just about every angle, with dozens of studies concluding that allowing crude oil exports would grow our economy, help protect and create jobs, reduce our trade deficit, put downward pressure on domestic gasoline prices and strengthen the energy security of our NATO allies, it is also instructive to look back to recent history at the example of Alaska, which had a similar oil export ban in place until 1996.
Alaska, just like the lower 48 states, was banned from exporting crude oil in 1975. However, in late 1995 and early 1996 President Bill Clinton, working on a bipartisan basis with Republican Senator Frank Murkowski, took legislative and executive action to allow Alaska to export its oil internationally. It is worth noting that the votes in Congress to remove Alaska’s export ban were highly bipartisan, with 77 House Democrats and 18 Senate Democrats, including Senators Tom Daschle, Ted Kennedy and Diane Feinstein, voting to remove the Alaskan oil export ban.
As part of the legislation to lift the ban for Alaska, Congress agreed to have the General Accountability Office (GAO) conduct a study of the impacts of repeal on Alaska, taxpayers, consumers and the West Coast’s energy economy. After three years of exports the GAO completed the study in July 1999. Below is a summary of the findings:
Alaska oil production increased. Allowing oil producers access to international markets provided an incentive for Alaska to produce more oil, grow economically, and create jobs.
“According to projections by the Alaska Department of Revenue and to oil industry officials, new oil fields developed in Alaska since the ban was lifted are expected to increase Alaskan North Slope oil production by an average of 115,000 barrels per day for the next two decades.”
Alaska’s tax revenue increased. By allowing exports, Alaska produced more oil and received higher payment for it, which increased its tax revenue.
“In April 1998, the Alaska Department of Revenue estimated that the annual increase in revenue resulting from higher West Coast market prices for Alaskan North Slope oil was $40 million.”
Consumer product prices did not increase. While some refiners on the West Coast paid slightly more for crude oil, transportation fuel costs were not impacted because they are determined by the international crude oil benchmark.
“Our analysis of prices of three key consumer products—gasoline, diesel fuel, and jet fuel—indicated that lifting the ban had no statistically significant effect on them.”
No environmental impacts were experienced. There were no environmental impacts associated with exporting oil versus keeping it in the United States.
“According to our discussions with Alaskan North Slope oil industry officials, state of Alaska officials, and environmental groups, lifting the export ban has had little effect on the Alaskan environment to date.”
Alaska’s experience is a case study of what analysts and academics predict would happen on a national level if the U.S. oil export ban is repealed: economic growth, job creation and no increase in gasoline prices. Or, as former Alaska Senator Mark Begich recently put it, “What was true for Alaska in the 1990s is equally true today for crude oil produced from our country’s prolific shale formations.”