LSU economist says lifting crude oil export ban carries risks, potential benefits for Louisiana
A few major studies have predicted that if the United States lifted its ban on exporting crude oil, oil production would skyrocket and as many as a million new jobs would be created. Gregory Upton Jr., an assistant professor at the LSU Center for Energy Studies, argued at Wednesday’s Energy Summit 2015 that those projections are vastly overstated.
But Upton said the change still could have a dramatic impact on Louisiana’s economy. U.S. refineries, many of which are based in Louisiana, are thought to benefit from the export ban because it suppresses the price of domestic crude below the global price. If domestic producers could sell their crude worldwide, the thinking goes, U.S. refiners could lose the cost advantage they currently enjoy over their foreign competitors.
“For Louisiana, the removal of the export ban will remove a long-running federal protectionist policy for an industry that has served as an important component of our economy,” Upton said. “But in return, we’ll have the opportunity for the state to be at the center of an emerging global trading hub.”
The domestic shale boom has caused crude imports through the Louisiana Offshore Oil Port to decline. But if crude exports are allowed, LOOP becomes a two-way import and export terminal, possibly allowing Louisiana to become the epicenter of the international crude market, Upton suggested.
Gasoline prices likely won’t be affected much by the change, he said. When considering lifting the ban, Americans will need to decide whether it continues to serve the country’s national security interests, which is not Upton’s area of expertise.
Also at Wednesday’s Energy Summit, Mike McGough, chief commercial officer with NuScale Power, said his company is making progress developing modular nuclear reactors that are safer, cheaper and more scalable than traditional nuclear power plants.
“Our core damage frequency is three orders of magnitude better than existing nuclear power plants,” he said.
And unlike Japan’s Fukushima nuclear plant, where a 2011 tsunami washed away the backup power and led to a meltdown, a NuScale plant faced with a similar crisis “shuts itself down and cools itself off forever, with no operator action in the control room, with no additional source of water, and with with no AC or DC power,” McGough said.
A NuScale plant can be built for less than $3 billion, compared to about $8 billion for a traditional plant, he said. A $217 million matching grant from the U.S. Department of Energy, awarded after a competitive bid process, is helping to defray the $1.1 billion design and certification cost, McGough said, noting the company still needs to raise another $300 million from investors.
Hopefully, the design will be certified by 2020, “which allows anybody to build that certified design at a location of their choice,” McGough said.
As previously reported, Frank Macchiarola, executive vice president for government affairs with America’s Natural Gas Alliance, also said at Wednesday’s summit that natural gas producers stand ready to meet new power demands, but new infrastructure is needed.