EPRINC: US oil product export ban would raise costs

Proposals to ban US petroleum product exports to ensure ample domestic supplies would raise costs for domestic consumers, the Energy Policy Research Institute (EPRINC) warned in a Dec. 21 briefing memorandum.

EPRINC cited recent US Energy Information Administration statistics showing the US imports 2 million b/d and exports 3 million b/d of products.

Requiring US Gulf Coast refiners to limit oil product sales to domestic markets that currently import products would sacrifice market efficiencies from sales to Mexico, Brazil, and other Latin American countries, EPRINC said.

“Gains in transportation efficiencies would be unavailable and refinery utilization rates would fall as refiners faced rising costs from higher transportation fees,” it indicated. “Such a policy would be counter-productive and increase the volume of net imports and forego the value-added benefits from higher utilization rates at US refineries.”

Refiners also produce products jointly, which would make it difficult to ban gasoline product exports without affecting diesel fuel, distillate fuel oil, jet fuel, and other sales, according to EPRINC.

“World petroleum product markets are highly cost-competitive and restrictions on either access to feedstock and/or limitations on sales into world markets will harm refinery profitability and reduce the economic benefits of value added processing within the national economy,” it said.

The proposed Keystone XL crude oil pipeline from Alberta’s oil sands to US Gulf Coast refiners would more directly improve domestic energy security than banning US oil product exports.

EPRINC said Keystone XL would bring new supplies to the US from one of the world’s most politically stable countries.

Keystone XL also would provide transportation for shifting patterns of upstream production in the continental US, EPRINC said.

“US and Canadian oil production dominates all the processing centers in the MidContinent. Rising liquid production from Canada, North Dakota, and (soon) from Ohio will require new transportation commitments (both rail and pipelines) to move the supplies to coastal refining centers,” EPRINC said.

Contact at nicks@pennwell.com

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