The more the 50 percent crude oil price decline since July 2014 has impacted oil and gas industries throughout the supply chain and reignited energy policy debates at federal and state levels. Light, sweet oil has accounted for the majority of the domestic production increase over the last eight years, but since U.S. refiners are more suited to process imported heavy, sour crude oil from Canada, Mexico, Venezuela, and the Middle East, producers are forced to sell their light oil at discounted prices.

With profit margins weakened due to low oil prices, a lift on export restrictions could increase revenues and production levels. As a result, producers have descended on Washington to lobby a lift to crude oil export restrictions, while domestic refineries continue to oppose any change. While a number of influential Republicans support lifting the ban, any legislation would likely be filibustered in the Senate or vetoed by the President.

The price decline has also weakened Democratic proposals to eliminate long-standing oil and gas tax deductions and subsidies in the near term. Both issues will play a role in the 2016 election cycle. At the state level, high oil-producing states are forecasting billions less in tax revenue due to lower production levels in the low price environment, which in some cases could create significant budget deficits. States that depend on oil and gas severance taxes to fund operations will be forced to implement spending cuts or draw on politically-sensitive trust funds.

EnerKnol’s 27-page report analyzes the potential policy and industry outcomes that the dramatic fall in crude oil prices could have on domestic producers, refiners, consumers, and state operating budgets for 2016 and beyond.

Originally published by EnerKnol.

EnerKnol provides U.S. energy policy research and data services to support investment decisions across all sectors of the energy industry. Headquartered in New York City, EnerKnol is proud to be a NYC ACRE company.