Oil Spread: Fourth Decline in Six Months

Since our last post, and much as predicted by three previous declines in the last six months, the WTI-Brent has collapsed again from $9 to $4.50. There is increasing talk of removing the ban on US oil exports. In particular, there was a study conducted by the Brookings Institution which argues in favor of lifting the ban. The authors are unequivocal [their emphasis]:

Based on our analysis we recommend that the U.S. reconsider and modernize its energy policy by lifting the ban on crude oil exports entirely and immediately. It is evident to us — based on our policy deliberations, the extensive macroeconomic modeling of the U.S. economy and the global oil market research we have commissioned — that the greater U.S. exports of crude oil, the greater the economic and energy security benefit to the country.

There were also comments by former Treasury Secretary Lawrence Summers:

The merits [of lifting the ban] are as clear as the merits with respect to any significant public policy issue that I have ever encountered. And it is an important test of the efficacy of the functioning of our democracy whether within the next nine months we will get to that correct solution.

There is therefore increasing momentum in favor of lifting the export ban. This would probably require a vote in Congress and is unlikely before the November midterms.

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