Even in a depressed global oil market, keeping U.S. crude production tied up at home imposes a significant cost on U.S. producers, according to a Rice University researcher. Further, exporting crude would not raise domestic gasoline prices but would improve national energy security, he said.

“We find evidence that the export ban already presents a binding constraint on the domestic market, and has done so for a while…[E]ven in a low international crude oil price environment the importance of addressing the export ban is very high, with discounts reaching as high as $8 per barrel in a $50 world, depending on the quality of the crude oil that is being produced and marketed,” wrote Ken Medlock, a fellow in energy resource economics at Rice.

Thanks to the abundance of light crude being produced from shale plays, the U.S. refining sector has backed out its use of imported light crude and is now backing out crudes that are heavier than West Texas Intermediate and light oils from shale plays, Medlock said in a new paper.

“This is where the discount arises — the domestic crudes, regardless of quality, must compete with medium-quality crude oils as the only market outlet is domestic refiners,” he wrote. “As more oil is displaced, the competitive margin for domestic production will increasingly be a heavier crude oil, which will drive steeper discounts until a new arbitrage mechanism is introduced, perhaps through either new refinery capacity or a lift of the export ban.”

Lifting the ban on crude exports would not raise domestic gasoline prices because refined products already are freely traded internationally, with U.S. prices in parity with those overseas, Medlock said. “Thus, the discounted prices of oil produced in the US are not reflected in US gasoline and refined product prices.”

And lifting the ban would foster improved energy security by reducing crude oil price volatility, Medlock said.

“Since it is well documented that heightened volatility is associated with macroeconomic malaise, to the extent that U.S. crude oil exports increase fungibility and dampen oil price volatility, it will transmit an energy security benefit to U.S. consumers,” he said. “Longer term, the U.S. can lead a transformation of the global oil market that could see North American and Western Hemisphere production capture a larger portion of a growing international market. This would carry tremendous benefits for U.S. foreign policy endeavors in the U.S.’s dealings with hostile oil-producing nations.”

At home, Medlock argues, lifting the crude export ban “would be transformative.” Capital would flow into pipeline and other infrastructure development to aid access to international markets. “We see that investment in the midstream would eliminate the discounts that already exist for domestic crude oils, thus providing a price lift in the field for producers.”