Feds: Oil exports could lower gas prices

Lifting the ban on exporting crude oil would not raise domestic gasoline prices and could even reduce them, a new report from the Energy Information Administration (EIA) predicted on Tuesday.

The conclusion of the report strongly takes the side of oil producing companies, who have ramped up their efforts to export crude and tried to fight back accusations that consumers would suffer through higher gas prices.

{mosads}While listing a number of caveats to its analysis and warning that the economic factors at hand are extremely complicated, the EIA said oil drillers would benefit from higher crude prices if the United States’ market were opened to the world, while margins for petroleum refiners would be squeezed.

“Petroleum product prices in the United States, including gasoline prices, would be either unchanged or slightly reduced by the removal of current restrictions on crude oil exports,” the EIA wrote in the report.

Prices of gasoline and other refined petroleum products are much more closely linked to the Brent crude benchmark, an international price, than West Texas Intermediate (WTI), the main domestic crude price benchmark.

Ending the export ban is likely to decrease the Brent price and potentially increase the WTI price slightly, the EIA said.

“As domestic producers respond to the higher WTI price with higher production, the global supply/demand balance becomes looser unless increased domestic production is fully offset by production cuts elsewhere,” it said.

Although other reports from outside the federal government have come to similar conclusions, the definitive nature of the EIA’s analysis is likely to add more heft to arguments from oil companies, Republican lawmakers and others that the ban should be lifted.

Consumers and Refiners United for Domestic Energy, an ad-hoc coalition of independent refiners who support the current export restrictions, argues that exports would increase prices for refiners, who will pass the costs onto consumers, increasing pump prices.

The House is likely to vote this fall to allow oil exports after Speaker John Boehner (R-Ohio) announced his support for the policy in July.

The Senate Energy and Natural Resources Committee passed a bill to end the prohibitions early in August, setting up a likely vote in the coming months on the Senate floor.

— This story has been updated.