Various views have risen on the impact of lifting the crude oil exports ban on different parties. The 40-year ban resulted to increased surplus in the US, which resulted in reduced oil prices in the country. While some would benefit from the lift of the ban on the export of crude oil, others would experience loses.
Numerous entities would benefit from the lifting of the crude oil export policy. The US oil companies would be the main beneficiaries as they would have a larger market scope. They would export the surplus and increase the level of production to increase supply in the international market. Other beneficiaries would be the Americans due to the reduction of gasoline prices in the local market. Increased supply in the global market would reduce the domestic prices. Increased production of oil would not only improve the level of profitability of the refining companies but also, lead to greater job opportunities. Consequently, there would be a reduction of the unemployment rate in the country.
The lifting of the policy would also pose an advantage to the global consumers. The US, due to increased production would facilitate increased supply. If the level of demand were to remain constant, the prices would reduce. Other refining countries would also benefit, as they would gain exposure to technological innovations that would help improve their production rate. The US economy would also benefit from the decision. For example, there would be increased taxes due to increased employment and profitability of the oil companies. By the USA becoming the best exporter in the oil industry, the economy of the US would benefit from the diversification of the countrys presence in numerous industries. Since the Americans are addicted to oil, reduced prices would increase disposable income. As a result, there would be the growth of other sectors.
However, not all parties in the world would benefit from the lifting of the crude oil. The major losers would be Russia and OPEC, who are the major suppliers of oil in the international market. The US would increase the level of supply of the commodity in the international market. With increased supply and constant demand, the prices would reduce. For this reason, the countries would experience reduced profitability. They would also have a reduction of the size of their market shares due to increased competition. The competition would not only arise from increased production by the US, but also increased refinery capacity by countries that would embrace the technological innovations. Consequently, there the existing power balance would shift as the US would gain as Russia loses.
Due to the current royalties, the taxpayers also stand a chance of losing. For example, the country stands a chance of reduced sustainability measures, which would cost the taxpayers in handling issues of pollution. This is because of the failure of the Bureau of Land Management (BLM) to evaluate the system regularly. Raising the royalty rates is not advisable as it would increase the level of risks of loss. There should be certain alterations in the existing system to contain the issue. The BLM should set a minimal royalty rate, instead of a fixed one. Raising onshore rates would reduce the probability of loss and increase environmental sustainability. A consistent royalty rate of 18.75% for both offshore and onshore production is also recommendable. This is an average rate that is not too low to cost the taxpayers, or too high to cost the producers.
Apparently, the local and global customers, oil companies, refinery countries, and US economy would gain from the lift of the ban. On the other hand, the losers would be Russia and OPEC. Taxpayers are also at a risk of losing. However, BLM can solve the problem through modification of the royalties system.
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Lifting the Crude Oil Export Ban. (2019, Aug 30). Retrieved from https://speedypaper.com/essays/lifting-the-crude-oil-export-ban
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