This week, the U.S. Energy Information Administration (EIA) published a report examining the Implications of Increasing Light Tight Oil Production for U.S. Refining. This is the fourth in a series of EIA-commissioned studies evaluating the impact of repealing the decades-old crude oil export ban on various segments of the economy. Previous studies focused on gasoline prices, technical options for refiners and crude oil imports.
In this latest study, EIA uses a low (3.5m bbl/d) and high (7.2m bbl/d) production scenario and models how refiners would utilize those barrels in a crude oil export restricted (crude oil export ban remains in place) and unrestricted (export ban is repealed) environment.
Importantly, EIA notes that this analysis did not consider “how possible feedback from crude export policies on domestic crude oil prices could, in turn, potentially affect domestic crude production levels.” In other words, this analysis does not consider how the price of crude oil would impact production levels, which is a key economic consideration when allocating capital. The reduction in rig count over the past few months is just one example of how crude prices impact production and activity.
Below are several key highlights and important context from the analysis:
Previous studies from EIA as well as other government agencies, independent experts, think tanks from across the political spectrum and academic institutions have concluded that American consumers benefit from repealing the decades-old ban on crude oil exports through a reduction and stabilization in gasoline prices. Additional research concludes that modernizing our energy trade policies to reflect America’s newfound oil abundance would increase GDP, reduce our trade deficit, protect and create jobs and enhance our national security. Those studies are available HERE.