New York — 

The United States produces so much oil that millions of barrels of crude are sent overseas every single day.

Those US barrels have become extremely valuable to the rest of the world since the war in the Middle East trapped nearly 1 billion barrels of oil in the Gulf. Asian and European nations have scrambled to replace the crude sidelined by the closure of the Strait of Hormuz, causing demand for US oil exports to soar.

US oil exports spiked to all-time highs in late April. Energy inventories, which act as shock absorbers, continued to shrink rapidly last week, according to federal data released Wednesday.

This raises an obvious question: If the United States has enough oil to ship overseas, why not keep more crude, gasoline and jet fuel at home to drive down rapidly rising prices?

After all, the United States sends more crude abroad than it imports. And some other countries, including China, began limiting their own oil exports weeks ago.

Industry insiders acknowledge that export controls could keep a lid on prices in the short term. In the long term, however, they worry such restrictions would crush US refiners and ruin America’s reputation as a reliable supplier of energy, potentially plunging its allies into recession.

The Trump administration says cutting back exports isn’t an option on the table.

Energy Secretary Chris Wright and Interior Secretary Doug Burgum have repeatedly made public and private reassurances that the White House is not considering restrictions on exports.

But some lawmakers hope the White House reconsiders.

Democratic Rep. Ro Khanna recently reintroduced  legislation that would ban the export of gasoline during periods of high gas prices.

“It’s common sense,” Khanna told Fox Business last month. “Why would we be sending our oil overseas when Americans are getting fleeced at the pump?… We should have our oil supply for Americans… That would bring down the price.”

Although banning energy exports might score political points, some analysts warn it will not have the desired outcome.

The problem is that America’s intricate energy supply chain relies on a mix of imports and exports. Matt Smith, lead oil analyst at Kpler, stresses that while the United States is a net oil exporter, it still imports 6.5 million barrels of crude per day.

America’s aging refiners have already maxed out on the light, sweet crude that is produced by the Permian Basin of West Texas and New Mexico. They often need to combine that US shale oil with heavier blends found in Canada, the Middle East and Latin America to churn out gasoline and diesel. The extra US crude gets exported.

In other words, the United States is not an energy island unto itself.

Banning energy exports could easily backfire, industry experts say.

Bob McNally, founder and president of Rapidan Energy Group and a former energy adviser to President George W. Bush, said any price decline caused by export restrictions would be temporary. The concern is that forcing refiners to run on US oil alone could deplete their profit margins.

“Refiners will make less gasoline, and that will eventually lead to higher prices,” McNally said.

Yet McNally isn’t ruling out export limits if the energy crisis intensifies, as he suspects it will. His firm sees a 35% chance that prices spike high enough that the Trump administration implements petroleum restrictions in some form.

“I’ve been in the White House when the walls close in. This is a terrible idea, but it might be difficult to resist as the price goes up,” McNally said.

Indeed, the worst energy supply shock in history has some analysts rethinking long-held beliefs about export controls.

Vikas Dwivedi, global energy strategist at Macquarie Group, said a temporary ban on oil and petroleum product exports would likely crash US gasoline and oil prices, easing pressure on consumers just in time for the midterms. He argued refiners could overcome problems caused by losing access to heavier foreign crude.

“I can’t believe I’m saying this. For my entire career, I would have said, ‘A ban won’t work. Don’t do it. This is nonsense,’” said Dwivedi.

Robert Auers, manager of refined fuels at RBN Energy, said banning oil and petroleum product exports could temporarily lower gas prices – but at a huge cost in the long run.

Auers argued that it would be a “total mess” that forces refiners to scale back production – and some would even permanently go out of business.

“You could bring prices way down next week. But that impact would fade over time. A year from now, prices might not be any different than today,” said Auers.

And Big Oil would surely fight such a move.

“This would be very bad policy and there would be very forceful and vocal opposition from the industry,” an oil-and-gas source told CNN.

Chevron CEO Mike Wirth warned this week that export bans, price caps and similar policies won’t work.

Wirth, speaking at the Milken Institute’s Global Conference, said such policies might be “well-intentioned,” but history shows they have “unintended consequences that can make things worse, not better.”

Limiting the supply of US oil to the rest of the world would harm the global economy, and that would likely blow back on the United States.

Dwivedi said global prices of oil, gasoline, jet fuel and other energy products would go “crazy high.”

“Suddenly, you could be risking a global recession. And we can’t be insulated from that. It would come full circle,” he said.

Auers predicted severe retaliation, including potentially tariffs, against the United States. “You would start a whole new trade war – worse than last year’s,” he said.

And some of those sky-high global prices would get paid by US allies in Europe and Asia – nations that are relying on American energy during a crisis.

“We would permanently ruin our reputation as an arsenal of energy,” McNally said.

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