As agreed with the Senate Committee on Energy and Natural  Resources and the House Committees on Resources and on Commerce,  this report responds to that mandate and addresses the effects of lifting the  export ban on (1) Alaskan North Slope and California crude oil prices and  production and (2) refiners, consumers, and the oil-shipping industry  (including the tanker fleet, the tanker building industry, and the tanker  repair industry) on the U.S. West Coast. Lifting the Export Ban Increased Oil Prices and Should Increase Future Oil Production

Lifting the export ban raised the prices of Alaskan North Slope and some  California oils between $.98 and $1.30 higher per barrel than they would  have been had the ban not been lifted. To date, these price increases have  not had an observable effect on Alaskan North Slope and California crude  oil production. Nevertheless, future oil production should be higher than it  would have been had the ban not been lifted because higher crude oil  prices have given producers an incentive to produce more oil. According  to oil industry officials, new oil fields developed in Alaska since the ban  was lifted are expected to increase Alaskan North Slope oil production by  an average of 115,000 barrels per day for the next two decades. However,  we could not separate the effects of lifting the ban on expected production  from the effects of broader oil market changes occurring at the same time. For example, relatively high world oil prices in 1996 and 1997 encouraged  oil producers to expand exploration and development, while low prices in  1998 caused producers to close wells and reduce development. Moreover,  this expected production increase will not reverse the decade-long decline  of Alaska and California oil production, which is expected to continue as  aging oil fields become depleted. Prices of Some West Coast Oil Rose as a Result of Lifting the Ban

While world oil prices have been volatile since the export ban was lifted,  the price of Alaskan North Slope and some California oil sold in the West  Coast market is higher than it would have been had the export ban not  been removed. There have also been  minimal effects on the shipping industry to date, although shipbuilding and  repair industry officials are concerned that business may shift in the future  to low-cost foreign shipyards. Some Refiners’ Crude Oil Acquisition Costs Rose, but the Extent Is Uncertain

While higher prices for Alaskan North Slope and comparable California oil  increased the costs of some individual refiners, we could not determine the  extent of the cost increase for these refiners or for the West Coast market  in general.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO reviewed Alaska and California energy production, focusing on the effects of lifting the export ban on: (1) Alaskan North Slope and California crude oil prices and production; and (2) refiners, consumers, and the oil shipping industry on the West Coast.

What GAO Found

GAO noted that: (1) lifting the export ban raised the relative prices of Alaskan North Slope and comparable California oils between $.98 and $1.30 higher per barrel than they would have been had the ban not been lifted; (2) these price increases have not had an observable effect on Alaskan North Slope and California crude oil production; (3) nevertheless, future oil production should be higher than it would have been because higher crude oil prices have given producers an incentive to produce more oil; (4) according to projections by the Alaska Department of Revenue and to oil industry officials, new oil fields developed in Alaska since the ban was lifted are expected to increase Alaskan North Slope oil production by an average of 115,000 barrels per day for the next two decades; (5) however, it was not possible for GAO to separate the effects of lifting the ban on expected production from the effects of broader oil market changes occurring at the same time; (6) relatively high world oil prices in 1996 and 1997 encouraged oil producers to expand exploration and development activities, while low prices in 1998 caused producers to close wells and reduce development activities; (7) moreover, this expected production increase will not reverse the decade-long decline of Alaska and California oil production, which is expected to continue as aging oil fields become depleted; (8) lifting the export ban increased some refiners' costs but had limited effects on consumers and the oil-shipping industry on the West Coast; (9) while higher prices for Alaskan North Slope and comparable California oil increased the costs of some individual refiners using that oil, it was not possible to determine the extent of cost increases for those refiners or the West Coast market in general; (10) despite higher crude oil prices for some refiners, no observed increases occurred in the prices of three important petroleum products used by consumers on the West Coast--gasoline, diesel, and jet fuel; (11) lifting the ban has also had a minimal effect to date on most oil tanker operators that transport Alaskan North Slope oil, the U.S. shipbuilding industry, and the West Coast ship repair industry; and (12) however, shipbuilding and ship repair industry officials on the West Coast are concerned that Alaskan North Slope oil tanker business may shift in the future to low-cost foreign shipyards.