A new report by the Government Accountability Office (GAO) suggests that removing export barriers for U.S. crude oil could lead to a reduction of consumer fuel prices in the domestic market.
After reviewing a number of studies and interviewing stakeholders, the GAO found evidence to suggest that removing crude oil export restrictions is likely to increase domestic crude oil prices but decrease consumer fuel prices.
It noted that prices for some U.S. crude oils are lower than international prices, and that allowing exports would result in prices increasing by about $2 to $8 per barrel, bringing them closer to international prices.
At the same time, however, studies and some stakeholders suggested that U.S. prices for gasoline, diesel and other consumer fuels follow international prices. Allowing crude oil exports would increase world supplies of crude oil, which is expected to reduce international prices and, subsequently, lower consumer fuel prices, the GAO reported.
Removing crude oil export restrictions may also increase domestic production and increase the size of the U.S. economy, though it may pose environmental risks, the GAO noted.
John Felmy, chief economist of the American Petroleum Institute (API), commenting on the report, said that the United States has become an energy superpower but its trade policies remain stuck in the 1970s.
"Allowing free trade in energy will mean more jobs, downward pressure on fuel costs, and can further reduce the impact of global unrest on oil markets. U.S. energy production is already having a major impact on world markets, and if policymakers embrace free trade, that influence will continue to grow in a way that benefits our economy," Felmy added.
In its recommendation, the GAO said that the U.S. energy secretary should undertake a comprehensive re-examination of the appropriate size of the Strategic Petroleum Reserve in light of current and expected future market conditions.
