Lifting the export ban on crude oil would be a boon to the U.S. economy
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IMAGINE THERE were a simple policy that would spur economic growth, lower gas prices and please international allies. This policy exists: removing the United States’ irrational and outdated ban on exporting domestically produced crude oil. A bill lifting the ban passed a Senate committee last week, a day after House Speaker John Boehner (R-Ohio) announced that he, too, supported bringing the country fully into the international oil market.
Congress imposed the ban amid the oil shocks of the 1970s in a desperate move to tame gasoline prices. Lately, the situation has changed: U.S. crude oil production rocketed up 74 percent from 2008 through 2014. That has led to a glut here at home, where crude oil is selling at a discount relative to world prices. Yet the ban’s superficial logic still appears to hold some power: Lifting the export restrictions, one might imagine, would send more oil abroad, which would raise gasoline prices here and hurt the economy.
In fact, experts predict gas prices would go down, based on the simple fact that you don’t put raw crude oil in your tank. Consumers don’t buy crude oil. Refiners do. Domestic gasoline prices tend to track international, not domestic, oil prices. So the current policy is great for refiners who get to buy their feedstock at a bargain price and sell their product at an international rate. But it’s not much help to domestic producers, who have to accept less money for the crude they bring to market, or to consumers, who don’t get the savings passed on to them.
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