In March, US Energy Secretary Chris Wright ruled out a White House move to restrict crude oil or petroleum product exports. Interior Secretary Doug Burgum has called the idea of an export ban “bad on all accounts.” Still, the Strait of Hormuz has been effectively closed for more than ninety days and it remains uncertain when the standoff will end. To date, drastic global inventory drawdowns and market adjustments have kept a lid on oil prices. Yet if the strait remains closed while stocks decline and other buffers are worn away, a sharp increase in oil prices and US gasoline prices is possible. In advance of elections this November, policymakers could reconsider a crude oil or petroleum product export ban. It is worth analyzing the potential consequences for US energy prices and the global oil market.
From oil import dependence to export powerhouse
From 2004 to 2007, the United States imported an average of 10 million barrels per day (b/d) of crude oil, and ever-growing oil and gas imports seemed inevitable. But the shale oil and gas revolution turned these expectations on their head, delivering the most rapid production increase in the history of the oil industry. From 2009 to 2019, US crude oil production grew by nearly 7 million b/d—adding almost twice the production volume of the United Arab Emirates in just a decade. After a robust debate, in December 2015 the US Congress repealed a ban on crude oil exports.
