Could we lower gas prices by limiting fuel exports?
In the last five years, the United States has been shipping more and more refined diesel and gasoline abroad — in 2011, fuel was our top export. But domestic gas prices are also high. That’s led some to wonder if we could lower prices by limiting fuel exports. Less for them, more for us. Right?
The short answer is: No, probably not. That’s according to a new brief by the U.S. Energy Information Administration, which argues that “record gasoline exports do not appear to be driving gasoline prices.” True, the EIA says, refiners on the Gulf Coast are shipping more gasoline overseas, primarily to Mexico and Latin America. All told, U.S. gasoline exports have more than tripled in the past five years. But, the EIA notes, that doesn’t mean a ban on exports would increase the supply of gasoline here at home and bring prices down.
For one, the EIA notes, many U.S. refiners find it highly profitable to ship gasoline and diesel to fast-growing markets overseas. If refiners weren’t allowed to ship to places like Latin America, the EIA argues, then their margins would thin and they might have to reduce output or even shut down refineries here in the United States. In the worst case, that could increase prices at the pump rather than lower them. (The United States has already endured several high-profile refinery closings this year.)
The other point is more subtle. If refiners on the Gulf Coast weren’t allowed to export gasoline overseas, then the obvious place to ship it would be to the East Coast, which currently imports a great deal of its gas from Europe. But the reason this isn’t already happening, the EIA points out, is because of constraints on pipeline capacity and various rules governing U.S. domestic shipping. So it’s not clear that an export ban would mean that the East Coast would start using more domestic gasoline.
Not everyone fully agrees with the EIA analysis. Daniel Weiss, an energy expert at the Center for American Progress recently testified (pdf) before the House on this subject. He notes that there’s some historical precedent for an export ban. Between 1973 and 1995, the United States prohibited exports of all crude oil produced in Alaska’s north slope. During this time, Weiss notes, that oil had to be shipped down to California, and gasoline prices on the West Coast dipped below the national average, at least for a few years. (Eventually the Alaska ban was lifted, although there’s still effectively a ban on most crude oil exports from the lower 48 states — we can ship out refined products like gasoline or diesel, but usually not the raw stuff.)
This debate over exports isn’t an idle one. In the House, Rep. Ed Markey (D-Mass.) has already introduced the “Keep America’s Oil Here Act,” which would prohibit the exports of refined fuel made from oil that’s produced on U.S. public lands. While the pressure to act on this issue might be easing up now that gasoline prices seem to be softening again, this topic will no doubt pop up in the future.