Falling gasoline prices hurts big oil's plea for U.S. crude exports

Big oil's (XOM) push to export U.S. oil overseas is facing a new obstacle: falling gasoline prices.

A flood of new oil from Texas to the Great Plains has swamped refineries, driving down pump prices 10% since March while global oil prices have hovered at ~$107/bbl; it suggests the world crude market is having waning influence on U.S. gasoline, which instead is beginning to track lower-priced domestic oil.

As cheaper oil translates to cheaper gasoline, the likes of Exxon (XOM) and Conoco (COP) will have a tougher time convincing U.S. lawmakers that ending export restrictions would benefit the country, says RBN Energy's Sandy Fielden, since "the most obvious thing that’s going to happen [given more exports] is that crude prices will go up and so will gasoline."

Lifting strict export limits would halt the decline in U.S. crude prices while costing motorists as much as $10B/year in higher fuel prices, according to Barclays.


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Comments (15)
  • positivethoughts
    , contributor
    Comments (2065) | Send Message
    How would exporting oil not help the U.S.? Would we not make money if we had extra capacity to export?
    28 Jan 2014, 05:18 PM Reply Like
  • AdamDivy
    , contributor
    Comments (413) | Send Message
    My thought would be that the supply would be lower so the price would be higher for us.


    It would bring in money to the country like you said.
    28 Jan 2014, 05:22 PM Reply Like
  • mmyo3
    , contributor
    Comments (91) | Send Message
    I think the reasoning is it would be bad for the guy driving to work. XOM, COP, etc maybe does not equal "us" in everybody's mind.
    28 Jan 2014, 05:34 PM Reply Like
  • G H
    , contributor
    Comments (453) | Send Message
    PositiveThoughts: Two things:
    1) The USA will never have "extra" crude as long as there is unfilled capacity in the Strategic Petroleum Reserve, created to make sure the US is never again held hostage by foreign oil producers as we were in 1975.
    2) You propose to let our taxpayer-subsidized oil producers sell American crude - pumped from government and private USA property, and routinely damaging our citizens' air, water, health and lands through offshore and pipeline spills, fracking pollution, and train derailments - to the highest foreign bidder. Clearly, that would help those producers make even higher profits from our national resources. But "help the US" ? You have a rather unpatriotic definition of "the US".
    28 Jan 2014, 05:40 PM Reply Like
  • chopchop0
    , contributor
    Comments (5357) | Send Message
    GH.... are you telling me that the government lets these oil companies drill on our land for free with no need to pay royalities, taxes and such? Is that therefore why the government gets to own the final products of what is produced by these companies?


    You sir may be the one with a questionable definition of the US
    28 Jan 2014, 11:02 PM Reply Like
  • NoVABIll
    , contributor
    Comments (41) | Send Message
    G H,


    How much do you think our oil companies are "taxpayer-subsidized"? I believe the oil companies pay hundreds of millions in tax to the various levels of US governments. Not including the taxes all the people working for US oil companies pay in their taxes.


    Do you not understand that if we do not produce these products you cannot drive, probably won't be able to heat your home or cook, won't benefit from anything plastic you use, won't benefit from affordable food produced and transported with oil company products. I want to do all of these things. If you do not then please take yourself off grid, move to the wilderness, burn wood and pollute the atmosphere. That will leave more product for "us" to enjoy and profit from.
    28 Jan 2014, 06:22 PM Reply Like
  • Phenom1
    , contributor
    Comments (555) | Send Message
    It seems to me that if lower gasoline prices won't catalyze exporting crude, then nothing will. Certainly not higher prices. The fact is that a meddling government never helped the majority of citizens, except in the short term. How many more Americans would find employment at good salaries if exports were allowed? We need to think on that reality before waving our hands in concurrence with the view expressed here.


    Let's also stop exporting grain (major pollution from insecticides), stop exporting cars (creates accidents and death in other countries) and medicine (think of all the side effects)!
    28 Jan 2014, 06:23 PM Reply Like
  • kmi
    , contributor
    Comments (4744) | Send Message
    Keeping energy costs low catalyzes every single business in the country and reduces costs on every single household. It's a pretty shallow analysis that leads to such a badly misinformed comment as the one above.
    28 Jan 2014, 06:27 PM Reply Like
  • change is the only constant
    , contributor
    Comments (2283) | Send Message
    For the longest time the US has struggled to get to energy independence. Its so close. If the world were falling all over itself to buy American manufacturing I would say sell crude too. But they are not. Lower crude is the way to keep inflation low for as long as we can.The internal fracking revolution has finally started to pay dividends; if we must tax it to pay for cleaning up the messy crude..do that. Energy Independence should come (and stay) before Big oil's profits. Do not screw that up.


    To be able to have an ample supply of energy is what will help American innovation way more than monetary policy.
    28 Jan 2014, 07:13 PM Reply Like
  • User 6903221
    , contributor
    Comments (2) | Send Message
    i dont understand either side of the argument . We are already exporting oil in the form of refined product ,you are already paying at the pump as gas prices are based on global oil prices not wti OH buy the way cold winter in all northern US nat gas up 20 percent in month just guess what happens when lng is exported and the Gov sayes export everything .Everyone should think about the long term picture instead of idividual parts of the picture . By the way I own oil nat gas and I dont look forward to any more exporting.
    28 Jan 2014, 07:41 PM Reply Like
  • kmi
    , contributor
    Comments (4744) | Send Message
    "you are already paying at the pump as gas prices are based on global oil prices not wti "


    This is a result of market inefficiencies that -can- be addressed via domestic initiatives, and depends on whether public policy promotes a change therein.
    My perspective is this: Jones act and ban on exporting should be lifted, because exporting US crude will decrease the Brent price, and likely feed back into US economy via a lower global price, and it would be simpler and less harmful overall than the alternative, i.e. the aforementioned domestic initiatives.


    Right now really the only entities really benefiting from the low price of domestic crude are refiners who sell refined products out of cheap crude to higher priced overseas markets. So eliminating the export ban may actually work better at reducing gasoline prices and energy costs than leaving it in place....
    As to Nat Gas, the amount of supply waiting in the wings is awesome to behold and I hardly think exports will impact the cost of energy domestically. However it will boost competitiveness of foreign producers who buy it, but it will simultaneously help us reduce our trade deficit which will balance that out.... Lotsa trajectories to follow on this one I think.
    29 Jan 2014, 11:04 AM Reply Like
  • Diggerdugit
    , contributor
    Comments (79) | Send Message
    I lived through the Arab oil embargo of 1975 and want no more of that. I am not a supporter of exporting oil until the nation becomes energy self sufficient. Its not the same as exporting the finished or refined products. I would rather have the other guys depending on us rather than to be ham strung by them (OPEC).
    28 Jan 2014, 08:12 PM Reply Like
  • Mike Nadel
    , contributor
    Comments (20493) | Send Message
    Just as I always feared: We'd have too much oil!!!
    28 Jan 2014, 08:13 PM Reply Like
  • charliezap
    , contributor
    Comments (2293) | Send Message
    ""As cheaper oil translates to cheaper gasoline, the likes of Exxon (XOM) and Conoco (COP) will have a tougher time convincing U.S. lawmakers that ending export restrictions would benefit the country, says RBN Energy's Sandy Fielden, . . ""


    I very much disagree with this analyst's opinion.


    For one thing, the US is still importing almost as much crude as we produce. In the latest reported month (October), we imported 7,745 TBD and produced 7,753 TBD. These are high numbers. If the crude export ban were lifted, then, because of pricing, supply, and transportation considerations, the volume of crude exports would probably be small compared with our total supply.


    For another, we are now exporting a considerable amount of products (mainly gasoline and diesel). Exports of finished petroleum in October were 2,594 TBD vs imports of 589 TBD. Exporting a few more barrels of American oil would have little effect on domestic gasoline prices.


    Plus, it makes more sense for the oil companies to argue for exports now, while gasoline prices are low, and consumers are not riled up against them. If prices were high, public sentiment would run more strongly against the companies and they would not even get a hearing.


    28 Jan 2014, 11:36 PM Reply Like
  • mitrado
    , contributor
    Comments (2033) | Send Message
    Falling gasoline prices... yeah, right. Go tell it to the Reader's Digest. Each time the gasoline falls 3 cents, it goes up 9 cents afterwards. 1 step back, 2 steps forward. Why would that change now?
    29 Jan 2014, 03:33 AM Reply Like
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