Oil Export Ban Hurts Eagle Ford

Eagle ford
Eagle ford

A new study from Rice University reveals that the decades-long oil export ban is having the greatest impact on producers in the Eagle Ford Shale region of Texas. The study takes a unique look at the dozens of crude types on the open market and tries to calculate their potential prices in the absence of trade barriers.

Related: Oil Prices Can Vary A Lot Across the U.S.

The oil that is pumped out of the Eagle Ford has less sulpher than WTI or Brent and would attract a higher price on the international market.

According to the report, the U.S. refining infrastructure isn't designed to handle the domestic crude qualities that are in abundance today, which has caused prices to be lower relative to internationally traded crudes.

If the ban were lifted, it would immediately allow the sale of domestic crude oils into the international market, where prices reflect differences in crude quality and therefore would be higher for the light crude oils being produced from shale plays.
— Ken Medlock, Rice University's Baker Institute for Public Policy

Earlier this month, IHS issued a report on the implications of the current ban and concluded that lifting the export ban could create hundreds of thousands of additional U.S. jobs and add billions to the U.S. economy. The report goes on to say that eliminating the ban will have far-reaching consequences for the U.S. economy including:

  • Further increases in domestic oil production
  • Lower gasoline prices
  • 964,000 additional jobs
  • Benefits to manufacturing and service-related sectors in every state
  • Strengthening national security and America’s position in the world

Related: Oil Export Ban Is Hurting Your Royalty Checks!

Read more at news.rice.edu