A 40 year ban on US crude exports should remain intact until the market reaches “saturation” point, according a Goldman Sachs Group report.
The booming shale production in the US has allowed the country to import less crude, leading to rumours about the ban being lifted.
However, the bank’s report highlighted a restriction on exports oversees will result in the “highest value” to the US economy. Instead it said the world’s biggest oil consumer should wait until it hit a “saturation point” when domestic refining capacity can no longer sufficiently absorb increased oil production.
The 1975 federal law curbs most exports overseas, except for very few refined exports including gasoline and diesel.
“Keeping the ban in place would be the optimal decision until saturation is reached to maximize the contribution of the refining sector,” said Damien Courvalin, a Goldman analyst in New York. “Once saturation is reached, it would then be optimal to lift the ban as value added from higher production outperforms value added from the refining sectors.”
Despite the ban being firmly in place, companies are still finding subtle ways to elude its restrictions.
BP took over 80% of the capacity of a new $360million mini-refinery in Houston that will process just enough to escape the restrictions.
IHS Inc. previously said the ban should be lifted because it would fuel higher oil production and reduce gasoline prices. The nation may save an average of $67billion a year from its import bill in 2016 and add 964,000 jobs by 2018, according to the Colorado-based consultant.
However, the bank’s report highlights that continuing to restrict exports oversees will result in the “highest value” to the US economy. Instead it said the world’s biggest oil consumer should wait until it hits a “saturation point” when domestic refining capacity can no longer sufficiently absorb increased oil production.
The 1975 federal law curbs most exports overseas, except for very few refined exports including gasoline and diesel.
“Keeping the ban in place would be the optimal decision until saturation is reached to maximize the contribution of the refining sector,” said Damien Courvalin, a Goldman analyst in New York. “Once saturation is reached, it would then be optimal to lift the ban as value added from higher production outperforms value added from the refining sectors.”
Despite the ban being firmly in place, companies are still finding subtle ways to elude its restrictions.
BP took over 80% of the capacity of a new $360million mini-refinery in Houston that will process just enough to escape the restrictions.
IHS Inc. previously said the ban should be lifted because it would fuel higher oil production and reduce gasoline prices. The nation may save an average of $67billion a year from its import bill in 2016 and add 964,000 jobs by 2018, according to the Colorado-based consultant.