Levi: Relaxing U.S. oil exports might not make sense

Michael Levi, senior fellow for energy and the environment at the Council on Foreign Relations, shared his thoughts last week on the U.S. ban on oil exports, saying on API’s Marketplace program that with global prices so low, it might not make sense for American drillers to increase production.

“I don’t think anyone knows what the price of oil will be in a year,” he said. “The big news in the oil markets is not just lower prices — it’s the return of volatility, and volatility works in both directions. … In the worst case, relaxing the ban doesn’t do anything.”

The story on the Marketplace website, by Dan Weissman, leads with the Government Accountability Office report stating that relaxing the 40-year-old export ban could lower domestic gasoline prices. Some experts disagree with that prediction, and in an event, the GAO report was written more than a month ago, before oil prices began to fall sharply on their own.

Breaking Energy’s Jared Anderson added:

“US producers might not want to sell into a bear market, as a sustained period of low oil prices would hurt their profitability and could put the brakes on US oil output growth. So changing the policy on exports might not alter physical balances and the price signals they send.”

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