US petroleum markets are in the midst of a major shift in energy production, as new and potentially large sources of domestically produced crude oil and natural gas continue to lower natural gas prices and lessen US dependence on imported crude oil. However, the rapid rise in production of tight oil in new locations has created an imbalance between the kind of oil being produced in the US and the design capability of the US refining system. As a result, the ban on crude oil exports may cause potential US oil production to be lost.
A NERA team was asked by the Brookings Institution to perform an analysis of the economic impacts on the US economy resulting from lifting the crude oil export ban. Using NERA’s Global Petroleum Model (GPM) and NewERA model to perform the analysis, the team considered the following four factors, which could potentially affect the impact of lifting the crude oil export ban
- US shale oil production potential;
- The scope and timing for lifting the ban;
- Uncertainty in global energy markets; and
- OPEC's response to the US lifting its ban on exports.
This report presents NERA’s conclusions concerning impacts on the economy, consumers, and crude oil and refined petroleum product markets when crude oil exports are allowed. It also corrects errors in economic reasoning and refutes myths about trade that have appeared in controversies over energy exports.
