Traders look to end of US oil exports ban Picture the US oil market as a kind of sieve. Exports of refined fuels such as petrol and diesel are flowing out at record rates. But thicker crude oil - the fuels" raw material - is largely trapped inside. This sieve is the government's ban on crude exports, in place since the 1970s. As US oil output makes a spectacular rebound, Washington is suddenly talking about whether to bin the ban. The debate will be one of the biggest oil market stories in 2014, with politicians arguing over the effect on petrol prices, traders focusing on how global crude flows might change, and energy investors searching for winners and losers among oil refiners and producers. Given that the US still imports more than 7m barrels of crude a day, the debate seems unnecessary. But the oil coming from shale formations in North Dakota and Texas is mostly "light," ill-suited to the nation's refining hub on the Gulf of Mexico. Reflecting this mismatch, barrels of light crude on the Gulf cost about $4 less than Brent, the $106-per-barrel global benchmark. The discount may drop further as new pipelines reach the coast. Lisa Murkowski, senior Republican on the US Senate energy committee, cited a potential glut of light crude as she called for an end to the "antiquated" export ban last week. The committee may soon hold a hearing on the issue. Some politicians fear lifting the ban would trigger a rise in petrol prices (and anger the motoring electorate). This is unsettled. There is some evidence that trapping American crude onshore is modestly beneficial for US drivers. At the start of 2010, before the US production boom had begun, consumers of petrol in the landlocked Rocky Mountains paid about 15 cents less per US gallon than counterparts on the east coast, who compete for supplies in world markets. By the beginning of this year, the Rockies price advantage had widened to about 30 cents per gallon. Ending the ban would raise US light crude prices to world levels, "and some of that would get passed along as higher gasoline and diesel prices" in the short term, says Tom Kloza of Oil Price Information Service. Others contend that liberalising crude exports could drive down US petrol prices. Seth Kleinman, analyst at Citigroup, says Brent would weaken by $5 per barrel in the face of unfettered US crude exports, taking as much as 24 cents per gallon off petrol prices. Energy economist Philip Verleger outlines a more dramatic scenario, arguing in a note this week that removing export controls could make 5m barrels per day of light, sweet crude available to the world market: an increase of about 15-20 per cent in the supply of that grade. Other things being equal, he says, light crude prices could be driven down some 30 per cent, or about $30. Many see loosened exports as bad for US refiners and good for European refiners and drillers. Barclays estimates that oil producers will forgo $3.4bn in annual revenue if the US coastal benchmark maintains its discount to Brent. Valero, the biggest refining company, says in a quarterly report: "Because the market for refined products generally tracks the price of Brent crude oil, which is a benchmark sweet crude oil, we benefit when we process crude oils that are priced at a discount to Brent crude oil." Refiners themselves are divided on the issue. Valero wants to keep the ban. Philip Rinaldi, chief executive of refiner Philadelphia Energy Solutions, calls loosening exports "a very bad idea." "I would prefer to be adding value and selling to others, rather than behaving as if we were a colony to the rest of the world and selling them the raw materials so that they could add value and sell us back expensive products," Mr Rinaldi says. Phillips 66 and Marathon Petroleum, two other independent refiners, say they favour free trade and would not oppose ending the restrictions. Phillips goes so far as to say crude exports would be "good for our country." Whether the ban is lifted, loosened or left alone is an open question. Any decision rests with the Obama administration's Department of Commerce, which has been silent. Legislation to change the policy has doubtful prospects in a divided Congress. "If companies in North Dakota start firing people," says Jeffrey Currie, head of commodities research at Goldman Sachs, "maybe that will be the incentive that actually creates the shift in the politics in Washington." Additional reporting by Neil Hume