WASHINGTON, Oct. 1 (UPI) -- Lifting the ban on exporting U.S. crude oil prices could lead to an increase of $2.50 per barrel for domestic producers, a federal report finds.
Members of the House of Representatives are debating legislation that would end the ban on exports of domestically-produced crude oil. The ban was enacted in the 1970s to counter a decision by Arab members of the Organization of Petroleum Exporting countries to halt oil exports to the United States because of Washington's alliance with Israel.
A report from the Congressional Budget Office finds authorizing U.S. crude oil exports under a bill sponsored by U.S. Rep. Joe Barton, R-Texas, would increase the price of U.S. crude oil by around $2.50 per barrel during a period ending in 2025.
"CBO also expects that, if export restrictions are removed, higher wellhead prices would provide an incentive for firms in most parts of the country to produce more oil," the report said. "In particular, we expect that firms would increase oil production in three states -- North Dakota, Texas, and Oklahoma -- that contain the most light oil and accounted for about 90 percent of the increase in total U.S. oil production over the 2009-2014 period."
An increase in crude oil production in the United States and OPEC decisions to keep output static has pushed crude oil prices to historic lows because global demand is low in major economies struggling to recover from the last recession. The low price of crude oil, meanwhile, means companies are working below their break-even prices, cutting staff and trimming spending on production.
With lower oil prices, the U.S. Energy Information Administration expects total U.S. crude oil production to start declining by next year.
Goldman Sachs in mid-September said the U.S. benchmark for crude prices, West Texas Intermediate, would average about $45 per barrel for 2016, down from the previous forecast of $57. WTI traded at $45.78 per barrel early Thursday.
Those in the refining sector, who oppose lifting the ban, said consumers would take on most of the increase in the price per barrel through the price they pay for gasoline, which is about $1 per gallon less than when crude oil sold above the $100 mark last year.
Barton, in a mid-September statement, said he would "guarantee" reversing the ban would lead to economic stimulus and job creation in the United States if his bill is signed by President Obama.
The White House said congressional resolutions to overturn the ban are moot because the decision rests with the Commerce Department, which already permitted the exports of some ultra-light forms of domestic oil.