Pipeline Constraints, Not Export Ban, Caused Big Price Differentials

摘要

Some studies have claimed that government regulation in the form of the export ban distorted the crude oil market and caused large declines in oil prices received by shale producers. They argue that new, light tight oil production was ill-suited for U.S. refinery configurations but had nowhere else to go because of the ban. We rigorously investigate these claims. We find that internal constraints in the crude transportation market - not external constraints - drove the dramatic, short-term discounts in domestic crude prices. Private investment eliminated these discounts, not government action. Exports of LTOs have increased over the past few years, and the international market will undoubtedly represent an important source of demand for domestic crudes. However, in framing policy debates around shale production, it is important to stay grounded in the data.