Crude Oil Exports Unleash the Supply Chain|
IHS study co-sponsored by EEIA documents the jobs and output gains that result with the lifting of the crude oil export ban by Congress in late 2015. Lifting the ban adds $26 billion to $47 billion to GDP and supports 124,000 to 240,000 jobs per year on average during the 2016-30 period. In the potential production case, 439,000 supply chain jobs are created by 2018 with the export ban lifted.
- The export ban causes US crude oil prices to be discounted versus international crude oil prices, an effect that reduces US oil production, supply chain activity, and job growth, but raises US gasoline prices.
- The industries that produce, transport and process oil are highly capital-intensive, supporting an extensive and diverse supply chain. Beneficiaries of this investment include domestic companies in equipment and machinery, construction and well services, information technology, materials, and logistics, and in the professional, financial and other services sectors.
- The economic benefits of oil and gas activity throughout this extensive supply chain far exceed benefits to the industry itself. Every new production job creates three jobs in the supply chain and another six jobs in the broader economy. Contributions to Gross Domestic Product (GDP) also multiply: every dollar of GDP created in the oil and gas sector generates two dollars in the supply chain.
- Lifting the ban on crude oil exports increases supply chain jobs and economic activity by stimulating capital investment, increasing crude oil production, and lowering gasoline prices. Based on two levels of crude production analyzed in this report, the positive impact on the crude oil supply chain of lifting the export ban is expected to add $26 billion to $47 billion to GDP and support 124,000 to 240,000 jobs per year on average during the 2016-30 period. The impact from a policy change is greatest in the short term (2016-20).
- The broader US economic impact is $86 billion to $170 billion additional GDP and 394,000 to 859,000 additional jobs.
- The supply chain benefits from lifting the export ban reach into every state and almost every US congressional district, from oil-producing Texas and California to states such as Illinois, Florida and New York, which have diversified manufacturing and services economies. Massachusetts, with its strong information technology and professional and financial services industries, also benefits from free trade. And in Washington State, which has strong information technology and manufacturing sectors, the supply chain contribution is almost half of the total state impact of lifting the crude oil export ban. Additionally, Illinois, ranked only 14th for oil production, accounts for roughly 10% of the overall supply chain impact. Furthermore, 5 of its congressional districts are in the top 20 in terms of value added, accounting for about 5% of that supply chain impact.
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