A press release received on Thursday:
New Government Study Suggests Lifting Ban on Oil Exports
Will Not Raise Gasoline Prices
WASHINGTON, D.C. (October 30, 2014)– Today, the U.S. Energy Information Administration (EIA) released a new reportthat finds domestic gasoline prices are linked to global oil prices. As a growing body of research has shown, repealing the ban on crude oil exports would create thousands of new jobs, and lead to an increase in American oil production and global oil supplies, putting downward pressure on gasoline prices for American consumers.
In response to EIA’s report, Producers for American Crude Oil Exports (PACE), a group of U.S. independent oil companies advocating for repealing the 1970s-era restriction on exporting American crude oil, released the following statement:
“Today’s report is further evidence that the ban on U.S. crude oil exports is outdated and should be lifted, because doing so will provide enormous benefits to American consumers and workers,” said PACE Executive Director George Baker. “As the EIA report notes, it’s the global crude oil market -- not the U.S. market -- that determines prices at the pump. That’s why removing the ban will not raise gasoline costs for consumers and it will create jobs, generate economic growth, and increase domestic oil production, which will provide greater energy security for the United States.”
The EIA report, found in its entirety here, made the following conclusions:
“The effect that a relaxation of current limitations on U.S. crude oil exports would have on U.S. gasoline prices would likely depend on its effect on international crude oil prices, such as Brent, rather than its effect on domestic crude prices.”
“The consistency over time of the pricing relationship between gasoline and Brent crude oil, and the apparent change in the pricing relationships between gasoline and West Texas Intermediate (WTI) when Brent and WTI diverged significantly starting in 2011, suggest that Brent, rather than WTI, has been more important in determining U.S. gasoline prices.”
“Together, these findings support the conclusion that the Brent crude oil price is more important than WTI crude oil price as a determinant of U.S. gasoline prices. The second conclusion shows that this was the case during both times of narrow and stable Brent-WTI spreads and times of relatively wide and volatile spreads.”
“Because the United States is an active participant in the global petroleum market as both an exporter and importer of gasoline, U.S. gasoline prices are tied to global gasoline prices.”
"This evidence supports the conclusion that the price of Brent, rather than the price of WTI, is the more important crude oil in determining U.S. gasoline prices."