American Oil and Gas Reporter - October 2015 - 42

EIA Touts Benefits Of U.S. Oil Exports
WASHINGTON-If the United States
removes restrictions on crude oil exports
and if domestic production increases
above 11.7 million barrels a day, the
U.S. Energy Information Administration
predicts U.S. consumers would see lower
gasoline prices by 2025.
In its analysis, Effects of Removing
Restrictions on U.S. Crude Oil Exports,
EIA examines how changes in U.S. trade
policies would affect oil and gasoline
prices, exports, refining activity, and domestic oil production.
The EIA report provides a final, nonpartisan confirmation that 1970s-era trade
restrictions on U.S. oil are bad for American consumers, asserts Kyle Isakower,
vice president of regulatory and economic
policy for the American Petroleum Institute.
"America is a global energy superpower now, and we shouldn't have trade
policies that make it harder for the United
States to compete with other suppliers,
such as Iran and Russia," Isakower says.
"The EIA report only reinforces the economic benefits of exports outlined in
every other major study: more U.S. jobs,

greater U.S. energy production, and downward pressure on fuel costs."

Four Scenarios
The effects of eliminating restrictions
on crude oil exports depend on the level
of future domestic production, which the
agency says depends on the characterization of resources and technology, as
well as future crude oil prices. The EIA
analysis studies four scenarios. Under
today's policies, projected domestic crude
oil production (including lease condensate)
in 2025 ranges from 9.5 MMbbl/d in the
low oil price (LP) case to 13.6 MMbbl/d
in the high oil and gas resource (HOGR)
case, EIA details. It says it also considered
a reference case and one that combines
HOGR with the LP scenario (HOGR/LP).
U.S. oil production climbed from 5.6
MMbbl/d in 2011 to 9.3 MMbbl/d in
August 2015, and EIA says that although
it projects domestic output to decline to
9.0 MMbbl/d in 2016, it sees production
growth past that year. However, the
agency notes the pace and duration are
uncertain.
"Petroleum product prices in the United

States, including gasoline prices, would
be either unchanged or slightly reduced
by removing restrictions on crude oil exports," the agency says. "Petroleum product
prices throughout the United States have
a much stronger relationship to North Sea
Brent prices than to West Texas Intermediate prices. In the high product cases
considered in this study (HOGR and
HOGR/LP), eliminating restrictions on
crude oil exports narrows the Brent-WTI
spread by raising the WTI price."
Under those scenarios, as domestic
producers respond to higher WTI prices,
EIA predicts the global supply/demand
balance becomes looser unless increased
U.S. oil production is fully offset by production cuts elsewhere. That looser balance
implies lower Brent prices, which in turn
leads to slightly lower petroleum product
prices for U.S. consumers, it says.
The agency points out federal regulations allow for unlimited exports of petroleum products, but require licensing
of crude oil exports. Exports of crude oil
to Canada for use there are granted a license presumptively, as are exports of
Alaskan North Slope crude oil, re-exports

The region's longest-running trade show -
produced by the upstream industry
for the upstream industry, in the
heart of the Eastern shale plays

October 27-28, 2015
Monroeville Convention
Center
Monroeville, PA

Great programming!
Excellent networking event!
Learn about the latest products and services!

Attendee and exhibitor information: www.pioga.org
42 THE AMERICAN OIL & GAS REPORTER

American Oil and Gas Reporter - October 2015

Table of Contents for the Digital Edition of American Oil and Gas Reporter - October 2015