U.S. exports of crude oil have been banned since 1975 as part of a law enforced by Congress in the aftermath of the 1973 OPEC oil embargo to guard domestic reserves and protect U.S. energy security.

But with U.S. crude oil production having surged by nearly 60% since 2008, thanks largely to the application of advanced drilling techniques that have unlocked a bounty of oil trapped in shale formations deep below the ground, the movement to end the nearly 40-year ban is growing ever louder.

According to recent comments by Energy Secretary Ernest Moniz and White House advisor John Podesta, the Obama administration is now seriously considering relaxing federal laws prohibiting exports. If the ban is lifted, here's what it could mean for the U.S. economy and the average American consumer.

The Houston Ship Channel, one of the busiest US seaports and a key waterway for oil shipments. Photo credit: Flickr/Roy Luck.

Broad-based economics gains
According to a recently released analysis by IHS, a leading consultancy, lifting the ban would lead to broad-based economic gains by boosting U.S. oil production, reducing our petroleum imports, lowering domestic gasoline prices, and supporting nearly 1 million additional jobs.

The study, titled U.S. Crude Oil Export Decision: Assessing the Impact of the Export Ban and Free Trade on the U.S. Economy, found that ending the ban would give energy companies incentive to boost spending by nearly $750 billion from 2016 to 2030, which would result in U.S. oil production growth of an average of 1.2 million barrels per day more than if export restrictions were left intact.

This increased investment would support an additional 359,000 jobs in 2016, as many as 964,000 additional jobs in 2018, and an annual average of 222,000 more jobs from 2020-2030. As a result of increased spending and job growth, U.S. GDP would rise by more than $70 billion in 2016, by more than $130 billion in 2018, and by an annual average of $73 billion from 2020 to 2030.

This would make the nation much less reliant on foreign oil and lower net petroleum imports by nearly 1 million barrels per day in 2016, resulting in savings of more than $43 billion, and by nearly 2 million barrels per day in 2020, saving the U.S. nearly $87 billion. And total government revenues would increase by a combined $1.3 trillion over the period 2016-2030, the study projected.

Modest positive impact on U.S. consumer
Lifting the ban would also be good for the U.S. consumer through another valve -- modestly lower gasoline prices. This is because exports would increase global crude supplies, thereby reducing the price of the global crude oil benchmark, Brent, all else being equal. Since U.S. gasoline prices are more closely correlated to the price of Brent than to U.S. crude oil benchmark prices, the cost of gas at the pump would fall by 8 cents per gallon through 2030, the study found.

A Shell gasoline station in California. Photo credit: Wikimedia Commons.

While that might not sound like much, the combined impact of lower gas prices, increased investment, and job growth would boost average disposal income per household by an additional $391 in 2018, the study estimates. That's nearly 400 more dollars that U.S. households can spend on other goods and services.

All opposed, please stand
But while the overall economy would likely benefit from allowing crude exports, there's one major group that would suffer -- U.S. refiners. These companies, which refine crude oil into petroleum products such as gasoline and diesel, have benefited tremendously from the shale boom that has driven down U.S. crude oil benchmark prices over the past few years.

Refiners' profits are largely determined by the price difference between domestic crude oil benchmarks like West Texas Intermediate, Louisiana Light Sweet, and Brent. The larger the price gap between these benchmarks, the higher their margins. But allowing exports would likely boost domestic benchmark prices while lowering the price of Brent, thereby compressing U.S. refiners' margins.

Large refiners including Valero (VLO 0.86%) and Phillips 66 (PSX 0.91%) are among those that would be affected. For instance, weaker refining margins were a key contributor to the decline in Phillips 66's refining earnings, which fell from $904 million in the first quarter of 2013 to $306 million during the first quarter of this year. Valero similarly credited lower throughput refining margins as one of the main reasons behind the year-over-year decrease in its refining operating income in the fourth quarter of last year.  

Yes or no to oil exports?
Overall, the IHS study -- and several other studies like it -- suggests that lifting the 40-year ban on crude exports would be a net positive for the U.S. economy. Benefits including higher domestic oil production, reduced petroleum imports, job growth, lower domestic gasoline prices, and higher government revenues should easily offset the negative impact on U.S. refiners. Personally, I think a piecemeal lifting of the export ban would probably be in the nation's best interest. What do you think? Could there be any unforeseen negative consequences?