Study: Removing Export Ban on Crude Will Create Jobs, But Opposition Strong

Texas could gain nearly 41,000 new jobs by 2020, and add $5.21 billion to the state economy during the same time period if the crude oil export ban is overturned, according to a recently released study. A number of other states also stand to gain jobs and a boost to their economy, as well; however, overturning the ban will not be a slam dunk, according to the American Petroleum Institute (API).

The study was done by ICF International and EnSys Energy, and it concluded that in addition to the new jobs and the boost to the economies in several states, consumers could save up to an average of $5.8 billion in fuel costs per year between 2015 and 2035 as higher production and more efficient markets boost supplies and lower costs.

Besides Texas, 17 other states could gain over 5,000 jobs each in 2020 from exports of U.S. crude oil, and a total of nine states could see more than $1 billion in state economic gains, the study said.

With so much to gain by ending the ban, who could be against it? Mostly, opposition comes from two groups – those who are “philosophically against the fossil fuel industry,” and those who “have a misunderstanding of how crude oil works,” Kyle Isakower, vice president for Regulatory and Economic Policy at the American Petroleum Institute (API), told Rigzone.

The crude oil export ban came about in the 1970s, when the fossil fuel industry in the U.S. was far different from the industry today, Isakower said. The U.S. oil and gas industry has gone through a revolution in recent years that was made possible by the technological advancements of 3-D seismic, horizontal drilling and hydraulic fracturing, making the country one of the world’s leading oil and gas producers.

That is a far cry from the 1970s, when many countries that exported to the United States would periodically limit exports, thus tightening U.S. supply and send prices rocketing up.

Additionally, some lawmakers and the public do not know how the crude oil market works. The majority of the refining capacity in the country was designed to work at optimum efficiency with heavy sour crude, not light sweet crude, Isakower said. While refineries designed for heavy sour can still refine light sweet crude, they do so with less efficiency, Isakower explained. Why this is important is because the oil coming from fracking in shale formations such as Eagle Ford, the Permian Basin and the Bakken in recent years is light sweet crude. Doing away with the ban would enable to the U.S. to export high-value light sweet crude, and import heavy sour crude, which is the kind of crude oil that most refineries were designed to refine.


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