The export ban on oil was enacted in 1975 in response to the oil embargo by Arab OPEC nations against the U.S. However, US oil production has doubled over the last six years, which has helped reduce its reliance on imported foreign oil. How would lifting the ban impact oil prices for US buyers and is it necessary to lift the ban? Economists weigh in:

Alan Gin from the University of San Diego says that oil prices won’t increase due to lifting the ban. “The market for oil is a worldwide market where the oil sold is fungible. There is a total global demand and a total global supply, and it doesn’t matter where the transactions occur. Oil exported from the U.S. means less supply for U.S. refineries, but would also put further downward pressure on world oil prices. A bigger factor in terms of oil prices is the weakening global economy in general and the slowing in China in particular, which will keep prices low.”

tankerNorm Miller from the University of San Diego says, “A recent analysis by Resources for the Future, a nonpartisan D.C. think tank, argues that lifting the export ban will allow disparate grades of petroleum to reach the refineries that can most efficiently process them, and that this in turn might actually decrease the cost of gasoline. Additionally if prices rise, based on global demand, less efficient shale oil producers will ramp up. At the same time, smart U.S. car buyers are going electric which is mitigating domestic demand.”

Dan Seiver from Reilly Financial Advisors says that prices will increase “But not by much, and it will probably lead to a more efficient allocation for refining the different grades and “sweetness” of different crudes. It will also depress a little further the world price of crude, which will hurt Venezuela, Russia, and Iran. Overall, export bans are bad trade policy, even if they make good politics.”

All in all, the experts agree that lifting the ban on exporting US crude will not affect prices negatively and it’s the right step for the US.