Study: Lifting export ban would bring diverse benefits: API-commissioned investigation predicts nationwide job growth
A study commissioned by a national energy lobbying group found every state — not just oil-producing ones like North Dakota — would benefit economically if the United States lifted its crude oil export ban, officials said.
“When it comes to crude oil, the rewards of free trade are not limited to energy-producing states,” Kyle Isakower, vice president for regulatory and economic policy at the American Petroleum Institute, said Thursday on a conference call with reporters.
Nine states, including North Dakota, would each see $1 billion in economic gain in 2020, and most of those states would also gain more than 10,000 jobs each, according to the study.
The export ban originates from 1975 as an effort to stabilize America in the case of oil embargos by foreign oil countries, after the 1973 Arab oil embargo threw the country through an economic loop.
Lifting the ban would benefit more than just oil-industry states like North Dakota and Texas — though those are two of the top states for job creation.
Isakower said that the 1970s-era trade restrictions no longer make sense.
North Dakota would gain 22,215 jobs in 2020, the report found, and Texas would gain 40,921.
Non-oil producing states where consumer spending and manufacturing drive growth would especially benefit, Isakower said. California, for example, would gain 23,787 jobs, according to the study.
And as an international hub for trade and finance, New York state would gain more than 15,000 jobs, the study found.
A similar study from firm IHS, also released Thursday, came to similar conclusions — and Isakower pointed that out.
That study stated the ban is a remnant of price control system that was only in effect until 1981, and said it is creating market distortions.
Lifting the ban would also put pressure to lower prices at the pump in a more global market, Isakower said.
“The price at the pump is going to be set by global refined product prices,” he said.
“When we’ve got a market which is linked to the international community, the prices at the pump are going to be more closely linked to the prices of refined products nationally.”
The refining industry isn’t as united against the oil export ban, as they profit from the new domestic production. But they are generally more built to process heavier imported crude, which means a glut is forming between production and refining within the U.S.
“So what we’re really talking about now is swapping out the light sweet crude we have growing on the domestic market for the heavy (crude) … from other parts of the world,” Isakower said, adding that that incentivizes more domestic production.
The U.S. oil market nears gridlock because of the “mismatch between the rapid growth of light tight oil and the inability of the U.S. refining system to economically process these growing volumes,” the IHS study reported. The resulting distortion will bring reduced investment in drilling, which will hurt oil production and related jobs, the study said. That study also found job creation across all states.
“We’re a free market organization,” Isakower said, “and the ban on exports is a restriction on free market.”