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This paper examines the effect of U.S. crude oil export bans on oil and refined products markets ... more This paper examines the effect of U.S. crude oil export bans on oil and refined products markets in the U.S. and abroad. It finds that export bans have been ineffective at reducing U.S. dependency on foreign import of crude oil. Recent increases in domestic production have helped displace some foreign imports, but the nation’s oil transportation and refining infrastructure has been ill prepared to handle the sudden surplus of light sweet domestic crudes. Early differentials between WTI and Brent were caused by transport bottlenecks. Now WTI and Light Louisiana Sweet crudes are trading at a discount to Brent as a result of oil export bans. Data shows that regional refined products prices are linked to international markets and track Brent prices rather than WTI. This indicates that a relaxation in export restrictions will not increase, but may in fact put downward pressure on gasoline prices. U.S. exports of refined products have increased greatly in recent years as refiners have been benefiting from export restrictions that reduce the price of domestic crude. Overall, there are indications that removing crude oil export bans will have a beneficial effect on the U.S. economy.
This paper investigates the historical and economic factors have led to Canada’s unimpressive ref... more This paper investigates the historical and economic factors have led to Canada’s unimpressive refining output in relation to its dominant position as an upstream producer. A historical and economic analysis of domestic and global refined product markets points to a number of factors that have made expanding domestic refining capacity an economic nonstarter. Initially, low crude quality restricted access to export markets and protectionist trade policies, in the face of insignificant reserves, hampered early refinery development in Ontario. Even after the discovery of large western reserves, interventionist government policies fostered uncertainty which curtailed investment. Ultimately, capital and geographical advantages of US refineries have confined Canadian refiners to domestic markets.
This paper examines the effect of U.S. crude oil export bans on oil and refined products markets ... more This paper examines the effect of U.S. crude oil export bans on oil and refined products markets in the U.S. and abroad. It finds that export bans have been ineffective at reducing U.S. dependency on foreign import of crude oil. Recent increases in domestic production have helped displace some foreign imports, but the nation’s oil transportation and refining infrastructure has been ill prepared to handle the sudden surplus of light sweet domestic crudes. Early differentials between WTI and Brent were caused by transport bottlenecks. Now WTI and Light Louisiana Sweet crudes are trading at a discount to Brent as a result of oil export bans. Data shows that regional refined products prices are linked to international markets and track Brent prices rather than WTI. This indicates that a relaxation in export restrictions will not increase, but may in fact put downward pressure on gasoline prices. U.S. exports of refined products have increased greatly in recent years as refiners have been benefiting from export restrictions that reduce the price of domestic crude. Overall, there are indications that removing crude oil export bans will have a beneficial effect on the U.S. economy.
This paper investigates the historical and economic factors have led to Canada’s unimpressive ref... more This paper investigates the historical and economic factors have led to Canada’s unimpressive refining output in relation to its dominant position as an upstream producer. A historical and economic analysis of domestic and global refined product markets points to a number of factors that have made expanding domestic refining capacity an economic nonstarter. Initially, low crude quality restricted access to export markets and protectionist trade policies, in the face of insignificant reserves, hampered early refinery development in Ontario. Even after the discovery of large western reserves, interventionist government policies fostered uncertainty which curtailed investment. Ultimately, capital and geographical advantages of US refineries have confined Canadian refiners to domestic markets.