Economy & Economic Development  October 20, 2014

GAO: Lifting export ban would decrease gasoline prices

Exporting crude oil from the U.S. could lower gasoline prices, according to a report issued Monday by the Government Accountability Office, though gas analysts aren’t so sure.

The report suggests that lifting a ban on U.S. oil exports would lead to lower prices of gasoline, diesel and other consumer fuels, according to the report. The decline in U.S. fuel prices would come from an increase in world supplies of crude oil driven by U.S. exports. The report estimates that gas prices would decline between 1.5 and 13 cents per gallon over the next several years.

Congress restricted crude oil exports in the 1970s in response to Arab oil embargoes. Removing export restrictions also would increase domestic production of 8 million barrels per day by another 130,000 to 3.3 million barrels per day on average from 2015 through 2035, according to the report.

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The report comes as U.S. oil production has risen from 5 million barrels per day in 2008 to 8.4 million barrels per day in April this year, an increase of 68 percent. Colorado set a record for oil production last year at 64.1 million barrels. Advances in techniques such as horizontal drilling and hydraulic fracturing in shale formations have led to the higher production.

Net crude oil imports have fallen from about 60 percent of consumption in 2005 to 30 percent in the first five months of 2014.

Patrick DeHaan, senior petroleum analyst for GasBuddy.com, said that lifting the crude oil export restrictions would grow the economy, but he disagreed that it would lower gasoline prices.

Lifting the ban would benefit U.S. oil companies because it would let them expand into international markets, but U.S. oil prices would rise closer to international oil prices, he said.

“Higher oil prices mean higher gas prices,” he said.

Stan Dempsey, president of the Colorado Petroleum Association, disagrees.

Colorado generally has had lower gasoline prices compared with many other states, he said.

“We get refined product, whether it be gasoline, diesel or jet fuel, from other states besides our own refinery in Colorado,” he said.

The report on the effect of oil exports on fuel prices comes amid lower oil prices that have pressured oil company stocks.

Meanwhile, photovoltaic solar system prices declined by as much as 19 percent nationwide in 2013, according to a separate announcement Monday from the National Renewable Energy Laboratory in Golden.

The federal lab attributed the drop in prices in part to the Department of Energy’s SunShot Initiative, a program to reduce the cost of solar installations to $1 per watt. Utility-scale photovoltaic solar system prices fell below $2 per watt in 2013, and have continued to decline to roughly $1.80 a watt this year.

This year, prices could drop by another 3 to 12 percent depending on location and market segment.

“These price drops are consistent with previous annual reductions achieved since 2010, when the Energy Department’s SunShot Initiative was established,” said NREL’s David Feldman, a lead author of the report.

Other factors that influenced a decline in photovoltaic solar system prices are local competition within marketplaces, prevailing retail electricity rates and solar panel efficiency.

“There is still considerable uncertainty as to how low (photovoltaic) system prices will drop in the next five to 10 years,” Feldman said. “However, there appears to be an emerging consensus that the SunShot’s price reduction targets are within reach and more and more likely to be realized.”

Exporting crude oil from the U.S. could lower gasoline prices, according to a report issued Monday by the Government Accountability Office, though gas analysts aren’t so sure.

The report suggests that lifting a ban on U.S. oil exports would lead to lower prices of gasoline, diesel and other consumer fuels, according to the report. The decline in U.S. fuel prices would come from an increase in world supplies of crude oil driven by U.S. exports. The report estimates that gas prices would decline between 1.5 and 13 cents per gallon over the next several years.

Congress restricted crude oil exports in the 1970s…

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