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Would exporting energy to Ukraine raise US gas prices?

The crisis in Ukraine has stirred support for expanded energy exports that could counter Russia's oil and gas leverage. How might expanding oil and gas exports impact US consumers? 

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Mario Anzuoni/Reuters/File
Gasoline drips off a nozzle during refueling at a gas station in Altadena, Calif.
  • By Daniel J. Graeber Guest blogger

Lawmakers in Washington say expanded energy exports could strengthen the U.S. hand overseas while at the same time shielding the economy from overseas shocks. How that affects U.S. consumers, however, depends largely on forces at home, AAA said Monday.

With Russian holding the energy cards in Eastern Europe, House Speaker John Boehner, R-Ohio, said it was time for Washington to act. In a letter to Central European leaders, the speaker said President Barack Obama should sign off "immediately" on pending export requests for liquefied natural gas to help U.S. allies overseas.

At the IHS CERA Week energy conference in Houston last week, U.S. Sen. Lisa Murkowski, ranking member of the Senate Energy Committee, struck the same chord for oil. She said reversing a ban on domestic crude oil exports could help establish the United States as the premier global superpower while creating more jobs at home. Adam Sieminski, director of the U.S. Energy Information Administration, said he was "quite prepared" to review the issue, though how that affects the domestic market remains to be seen. (Related Article: Coal’s Comeback Year Runs into Trouble) 

Michael Green, a spokesman for AAA, told Oilprice the jury is out on just how increased exports could affect consumers in the United States. Increased exports, he said, could stimulate oil production and reduce some market volatility.

"On the other hand, exports would increase demand for domestic oil, which could push prices higher in the United States," he said. "Refineries in many parts of the United States currently have access to relatively inexpensive crude oil and could lose that cost advantage if policymakers allow expanded oil exports."

Green said Russia's military response to the Ukrainian row overseas caused oil prices to spike last week.  By Monday, however, Brent crude was trading below the $108 per barrel mark, down by more than $1.00 amid disappointing economic data from China. The decline was limited because of simmering tensions over Ukraine, though unless there's some form of major response to Russia's actions overseas, petroleum prices should be relatively unaffected, the spokesman said. (Related Article: Lingering U.S. Winter and Ukrainian War Could Spark Perfect Gasoline Storm)

AAA said Monday's national average price of $3.49 is only slightly higher than last week, but marked the 31st consecutive day of increases. South Carolina reported the lowest state average with $3.19 for a gallon of regular unleaded while California had the highest in the Lower 48 with $3.91.  This time last year, the national average price was $3.70 per gallon.

Green said the steady increase in gasoline prices is largely related to refinery maintenance and the shift to the summer blend of gasoline, which is more expensive to make. Daylight Saving Time means days are longer and warmer months are ahead, which could lead to an increase in demand as cabin fever breaks. The spokesman said there's not much volatility on the horizon, however, and "unless there are unexpected problems, it is likely that prices will peak at the lower end of our springtime forecast of $3.55-$3.75 per gallon."

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