from the Wall Street Journal editorials, Oil Export Myths:

One liberal target is to prevent any easing in the 39-year-old ban on oil exports. The ban makes less sense each year as U.S. production increases, with the latest estimate at 9.3 million barrels per day in 2015, up from about nine million last year. But the ban makes for good populist politics, and New York Senator Chuck Schumer is promoting an amendment requiring that any oil that flows through the Keystone XL must stay in the U.S.

This makes no economic sense, starting with the fact that the oil market is global. What matters for prices are global supply and demand. To the extent more U.S. crude makes it to the global market, prices will be lower, other things being equal.

All the more so given that most U.S. oil is lighter crude that can’t all be processed by U.S. refiners. American refineries on the Gulf Coast were built to process heavy imported crude from the likes of Venezuela. Light crude is valuable and should be fetching a premium. Instead, U.S. producers are at the mercy of U.S. refiners, since the export ban means they have nowhere else to sell.

As U.S. supplies have swelled, those refineries have had more leverage to push down prices for U.S. shale oil. While the price of Brent crude, the world benchmark, is still about $50 a barrel, producers in the Bakken Shale in North Dakota this month are averaging about $34 a barrel for light crude. Exports would allow a more efficient oil market.

Opponents of lifting the ban argue that keeping U.S. oil here will enhance U.S. energy security, as if it can be stockpiled for use in an emergency. The feds already have the Strategic Petroleum Reserve, which can provide some relief in a genuine crisis. But companies are only going to drill if they can sell oil at a profit.

HKO

The central planners think they know more than they do.They think they are making prices lower by restricting exports when the opposite is likely to occur.  How many times do they get this wrong before they learn that markets are more complicated than they realized, and more effective than they can dream of being. When wil they realize that any benefit that they think they can direct will come at the cost of some other group, in this case American consumers.

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