Benjamin Zycher of the American Enterprise Institute writes against reinstating the ban on crude-oil exports:
A number of perverse Beltway ideas never seem to die despite their underlying fallacies. The latest such nostrum is the argument that a renewed ban on the export of crude oil and refined products would reduce domestic fossil-energy prices, as asserted in a recent letter to President Biden from four U.S. senators urging Biden to “preserve petroleum supplies for the U.S. and our allies.”
Just such an export ban on crude oil was implemented by the U.S. beginning in 1975. This followed the 1973 global price increases and the imposition of price and allocation regulations on the U.S. market, resulting in an artificial suppression of domestic production. (It was the regulatory regime and not the “embargo” that created the queues and massive market dislocations.) The export ban was ended by legislation in 2015, after the technological revolution in fracking and horizontal drilling yielded a sharp increase in U.S. output.
Notwithstanding ubiquitous assertions to the contrary, the ban did not reduce U.S. prices below international ones because it created a disincentive for foreign producers to export oil to the U.S. Why should foreign producers sell to us for less? Market forces thus resulted in domestic and international prices being equated, controlling for such factors as transportation costs and exchange rates. The same is true for such refined products as gasoline.
Read the whole thing here.