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American oil companies urge White House to lift ban on oil exports

14 March 2015 09:33 (UTC +04:00)

American oil company leaders met with representatives of the Obama administration over the matter. Representatives of 11 oil companies that are members of the lobbying organization “Manufacturers for American exports of crude oil” (PACE) met with White House energy adviser Brian Deese to persuade the White House to lift the ban imposed on oil exports in 1970. Note that, Energy Policy and Conservation Act was adopted in 1975 as a defense mechanism in response to the oil crisis of 1973 and an oil embargo by Arab countries.

The lifting of the ban is becoming more fundamental fro US oil companies. US oil production in 2011 increased by 53% to reach 8.65 million barrel per day (third after Russia and Saudi Arabia), and is expected to reach departments, 9.5 million barrel per day in 2016. However, this will benefit refineries rather than manufacturers. Refineries buy oil at domestic prices, which are cheaper world prices, and the final output sells abroad.

US WTI crude oil now is $ 10 cheaper than global benchmark Brent. Manufacturers emphasize there is a need for new markets, saying that the lifting of the ban will also have positive effects for the economy, such as new jobs, high global competitiveness of the United States, and most importantly, lower domestic prices for gasoline.

American oil companies are making the embargo, arguing that the need for new markets and simultaneously pointing to the expected positive effects for the economy - new jobs, increase the global competitiveness of the United States and, most importantly. The fact is that the gasoline price in the US is more dependent on the Brent price than WTI. Exports of crude oil will reduce its supply in the domestic market, and thus leading to an increase in oil prices in the country. And the expensive US crude oil will boost production. Consequently, global oil supply will increase, and the Brent crude price along with gasoline prices in the United States will fall.