The U.S. export ban is harming the oil patch and raising gasoline prices

See Oil Export Folly from the WSJ. Excerpts:

"That production is now under pressure from lower prices, but the damage could be reduced if U.S. producers were able to export more of their product to meet demand in the global market. American frackers produce the light, sweet crude known as West Texas Intermediate (WTI), and world refineries are eager for more.

But U.S. producers can’t export their oil, and U.S. refineries are mainly built to process heavier oil imported from Mexico, Venezuela and Canada. This refining mismatch means that U.S. oil is piling up in storage or being sold at a discount. WTI now trades 20% below the world market price, which means additional pressure on U.S. producers to stop drilling."

"The political fear is that lifting the ban would increase U.S. gasoline prices, but the opposite is true. U.S. pump prices are mainly tied to the price of Brent crude, which is freely traded on the world market and is higher than it might otherwise be because of the ban on U.S. exports.

If U.S. producers were allowed to compete globally, prices of Brent and WTI would converge over time, and U.S. gasoline prices would come down, all other things being equal. As former Obama White House economic aide Larry Summers explained at the Brookings Institution last summer, “permitting the export of oil will actually reduce the price of gasoline.”"