Iran war reignites debate over U.S. oil exports
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The Iran war is drawing fresh scrutiny to American crude oil exports as a way to curb skyrocketing fuel prices.
The big picture: The U.S. has become one of the world's largest oil exporters since a law changed a decade ago allowing crude to flow beyond American borders.
Catch up fast: The Trump administration is scrambling to do something — anything — to lower oil prices amid the Iran war.
Yes, but: Even if President Trump invoked an export ban, the effect would likely be limited — like most of the levers he can pull to tame runaway oil and gasoline prices.
Driving the news: Reinstating the ban was floated earlier this week inside the White House, but it's not currently a leading option, administration officials and others say.
- When asked Wednesday on CNN about restricting oil exports, Energy Secretary Chris Wright emphasized the worldwide nature of oil markets.
"We have global markets in energy for products, for oil and all that," Wright said. "No discussion about doing that."
Friction point: Trump has few tools to quickly push oil prices down as long as the Strait of Hormuz — an artery for about 20% of global oil supply — remains effectively shut.
Zoom in: Other moves have included coordinating an historic and global release of emergency oil barrels earlier this week, and suspending certain shipping requirements.
- But no move is expected to put sustained downward pressure on prices, given the strait's importance.
- The U.S.'s de facto control over the oil supplies of Venezuela is seen in the Trump administration as a newfound shield protecting against a potential oil shock.
What they're saying: "At present, export restrictions are not on the table, but if oil prices surge and are sustained, the administration will have to consider novel responses," said Glenn Schwartz, director of energy policy service at consulting firm Rapidan Energy Group.
The intrigue: Oil prices are set globally, which makes the politics and economics of gasoline prices complicated and sometimes counterintuitive.
- Industry officials argue more oil on global markets ultimately lowers prices everywhere.
- But the same dynamic means no country — even the world's largest producer — is insulated when prices spike.
The intrigue: Trump suggested Thursday that higher oil prices could benefit Americans — though the gains would largely accrue to oil companies.
- "The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money," he said on social media.
Between the lines: Calls to restrict exports tap into a politically potent instinct during shortages: Keep scarce resources at home.
- That impulse helped drive the original export ban more than 50 years ago.
How it works: "Restricting exports would have only a minor, temporary dampening effect on domestic crude and/or refined product prices," Schwartz said. "Before long, U.S. prices would rise again as drillers and refiners reacted to restrictions by reducing activity."
- Not to mention, U.S. refineries are maxed out in their capacity to process domestic crude, and the "excess has to be exported," according to Ben Cahill, director of energy markets and policy at University of Texas-Austin.
Flashback: Congress imposed the ban after the 1973 Arab oil embargo sent gasoline prices soaring.
- Congress lifted it in 2015, when then-President Obama signed a deal pairing the change with renewable-energy subsidies.
- The law preserved presidential authority to restrict exports for up to a year in certain scenarios, including supply shortages or unusually high domestic prices.
"When Congress lifted the export ban in 2015, they explicitly preserved this authority," Schwartz said.
What we're watching: How long this lasts.
Axios' Marc Caputo contributed reporting
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